Only half of Indian listed companies set net carbon emissions commitments: WTW

• Most companies are wary of climate related disclosures and bogged down by high costs of assessment, lack of regulatory mandate, etc.
  
• As per SEBI mandate, top 1,000 listed companies have to report their sustainability performance starting FY23.
  
• However, their state of readiness in terms of disclosures is varied, the report says.

Only half of Indian listed companies have set carbon emissions commitments, while the other half are unsure about the same, says a study by WTW, a global advisory, broking and solutions firm.

Amongst those who have set carbon emissions commitments, even fewer companies – at 43% — aim to reach net zero carbon emissions by 2032. This is in spite of the fact that 73% of the companies have board-level or CEO level oversight of climate risk.

Indian markets regulator Securities and Exchange Board of India (SEBI) has mandated the top 1,000 listed companies to report their sustainability performance from FY23. “With the top 1000 listed companies in India obliged to undertake climate financial reporting based on recommendations by Business Responsibility and Sustainability Report (BRSR), the state of readiness is varied,” the report says.

Most companies face barriers with regards to climate-related disclosures due to a variety of reasons — high costs of assessment, lack of regulatory mandate, insufficient data and standardized metrics, and shortage of in-house capabilities.

“We expect to see increased attention and scrutiny from a wider set of stakeholders on climate-related disclosure and risk management in India. This is a specialist function, so it is understandable that most companies lack inhouse capability. Companies should partner with experts to bridge the gap with relevant data, analytics, and insight to support climate change governance,” said Vivek Nath, head of India, WTW.

Companies undecided about frameworks

The report further says that 79% of companies are undecided about which climate disclosure framework to adopt, despite having processes in place for identifying, assessing, and managing climate-related risks.

Out of the companies which have selected disclosure frameworks, most companies intend to use the CDP framework. CDP framework is a voluntary reporting framework that companies use to disclose environmental information to their stakeholders.

While 53% of the surveyed companies are actively conducting internal discussions to disclose under the Task Force on Climate Related Financial Disclosures (TCFD) framework, 47% of companies are not privy to TCFD.

TCFD is a globally accepted climate change action and reporting framework, approved by the SEBI as well in India.

“While the current impetus to climate-related disclosures is regulatory requirement or investor and consumer expectations, it is critical for companies in India to integrate climate risk mitigation and by extension Environment, Social, Governance (ESG) linked actions into their climate transition roadmap,” Nath further added.

SEE ALSO:
'One-trick' ponies – US, India and China markets are rallying on single narratives, investors need to be cautious, say experts
World Bank revises India's GDP growth forecast upwards to 6.9% for FY23