Status of Indian companies in Investor CDP India 2012 program

Year 2012 experienced a lesser number of companies disclosing information on their carbon emissions and climate change risks and opportunities to Carbon Disclosure Project (CDP) than the previous year. However the quality of disclosure by the responding companies has improved.

Each year, CDP requests information on the carbon dioxide emissions and climate change risks and opportunities from India’s largest companies on market capital.  This information is then provided to the investors signatories and is also made available on CDP websites for other stakeholders.

CDP is endorsed by the 655 institutional investor signatories with a combined US$ 78 trillion in assets. CDP is an effective way to encourage companies to voluntarily disclose their GHG emissions along with risks and opportunities of climate change. In 2007, CDP started its India specific disclosure program with the help of its Indian partners –WWF India and Confederation of Indian Industry (CII- Centre of Excellence for Sustainable Development).

 

Snapshot of the disclosure;

Overall 53 companies have responded to CDP in the year 2012 as compared to 57 and 51 in year 2011 and 2010 respectively. However, 34 companies have responded publically as compared 31 last year.  As per the disclosure data, 91% companies have established senior managerial level committee to address climate change issues and related strategy.

Total 95% of responding companies indicated that they may face risks and opportunities due to climate change especially due to the increasing green regulations by Government of India. India’s National Action Plan on Climate Change envisages eight missions that encourage the use of renewable energy, bringing energy efficiency in the industries and reforestation. Carbon tax or the fuel tax on coal and Renewable Energy Purchase Obligations has already been initiated in India.

A total of 81% of responding companies indicated physical risks due to climate change that can affect their businesses. It included risks due to shortage of or no rainfall, water scarcity, sea level rise in the coastal areas and storms.

Along with the risks due to climate change, companies have identified opportunities too. A total of 86% of responding companies have identified opportunities due to the change in regulations as a result of climate change. Regulations like Perform Achieve and Trade (PAT) scheme under the National Mission on Enhanced Energy Efficiency (NMEEE), Renewable Energy Certificate (REC) mechanism creates financial benefits for companies.

The reported carbon emission from all the responded companies was around 89.41 (Scope 1-Direct emission) and 6.46 (Scope 2- Energy indirect emissions) million tons for the year 2012. This is greater than the previous year. Total 11% increment in scope 1 emission than the previous year has been reported.

CDP India introduced the Carbon Disclosure Leadership Index (CDLI) in India for the first time in the year 2011. The CDLI disclosure scores are based on the methodology developed by CDP and ranks the organization according to the quality of disclosure to the CDP information request. In the year 2012, CDLI or the quality of disclosure has increased by an average one point than the previous year. The average CDLI was 77 in year 2011 and in year 2012 it is reached to 78.  Companies with their score are given in the following table;

Tabel 1: Performance of Indian companies in Carbon Disclosure Project (CDP)- 2012

Sector	Company Name	Disclosure Score
Information technology	Wipro	95
Utilities	GVK Power and Infrastructure Limited	82
Consumer staples	ITC	82
Consumer discretionary	Mahindra and Mahindra	82
Information technology	Tata Consultancy Services	78
Consumer staples	Tata Global Beverages	78
Financials	ICICI Bank Limited	74
Industrials	Larsen  & Toubro	73
Materials	Tata Chemicals	73
Materials	Tata Steel	73
Financials	Yes Bank limited	73
Materials	ACC	72
Energy	Essar Oil	72
Information technology	Infosys	72
Financials	HDFC Bank Ltd	71
Materials	Sesa Goa	70

 

Companies with low scores in previous year performed well in the year 2012. Last year Tata Consultancy Services was in the first position, followed by Wipro and Yes Bank. Wipro ranked first in year 2012 followed by GVK Power and Infrastructure Limited on second position (GVKPIL was on eighth position in year 2011).

Investor CDP 2012 report shows a positive response from the Indian industries. It is an indicator of better business responsibility by them.  Companies have started considering their sustainability and carbon emission related disclosure as a tool to enhance their reputation among the stakeholders on climate and sustainability performances.   They have also recognized Climate Change and Energy Security as key sustainability challenges and can do better business identifying and mitigating the potential risks and harnessing the opportunities.

Information source: Investor CDP 2012 report available on CDP website.