Guess who in India Inc. owns the biggest mango orchard? It’s Reliance Industries Limited (RIL), the oil-to-telecom giant owned by the country’s biggest billionaire Mukesh Ambani. You might wonder what mangoes have got to do with a company whose origins lie in the fossil fuels business. For the No. 1 company on the Fortune India 500 list, the orchard—spread over 875 acres around its refinery along the country’s west coast—is symbolic of its commitment to preserve the ecological balance even as its businesses spew greenhouse gases. But the ₹5.4-lakh crore conglomerate is now no longer aiming for the low hanging green fruit. Instead, it wants to be a zerocarbon entity by 2035, riding on its $10-billion (₹75,000-crore) renewable energy bet.

It’s a turning point for India Inc. as it has, traditionally, dabbled in the green from a compliance perspective rather than a way of doing business. A concoction of regulations blending consent, permits and fines, largely under the ambit of the environment ministry and pollution control boards, has governed the behaviour of companies. In practice, sustainability is enshrined within the CSR Act.

“The tendency is still to look at environmental laws as a regulatory burden that hampers the ease of doing business, instead of looking at them as essential to the fulfillment of corporate and social obligations,” says Jairam Ramesh, former environment minister and Congress MP.

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For far too long, Corporate India was missing the forest for the trees. “For instance, a lot of companies believe planting trees under their CSR programme can be used as an offset against their own emissions. We think that methodology is not robust and needs to be looked at carefully,” points out Damandeep Singh, director (India) at CDP, a non-profit that runs a green disclosure system globally. But a change is underway, albeit slowly.

Under the 2015 Paris Agreement, aimed at restricting warming below 2° C, India has committed to a one-third reduction in emission intensity—the amount of carbon dioxide (CO2) released relative to the GDP—over 2005 levels by 2030. Further, the government is pushing for renewables to make up for 40% of its electricity generation capacity, besides the creation of an additional carbon sink through afforestation.

While the Paris accord is a political agreement entered into by 196 countries, rules and regulations will, eventually, percolate down to corporates. R. Gopalakrishnan, former director at Tata Sons, believes sustainability will eventually become a core function of a CEO. “The CEO’s agenda in a top company today is naturally going to be vastly different from that of his counterpart 25 years ago. It’s like digitisation. It should be integral to the business strategy, and not an agenda of the IT department,” he says.

Against such a backdrop, putting out the right narrative is gaining precedence among corporates—they want to be seen as green evangelists.

There is a perceptible shift underway in the power sector—one of India’s biggest sources of pollution with 202 GW of coal-based thermal plants. Sustainability is now a strategy for power players. From 17.5 GW in June 2010, renewables have seen a fivefold increase to 95 GW. What is also fuelling the green rush is improving economics. “Renewable energy is in a deflationary stage as the costs for setting up solar photovoltaics projects have fallen 80% in India over the past decade,” says Vibhuti Garg, economist at the Institute of Energy Economics and Financial Analysis.

While the power sector sees its future as green, others see climate change as a clear and present danger. According to non-profit CDP, 39 listed Indian companies have put the risk to their business from climate change at a record ₹7.13 lakh crore. (See graphic).

When the chorus around green is growing, there is no doubt that corporates have covered good ground on sustainability with the three Rs: reduce, reuse, and recycle.

With India set to ban single-use plastic by 2022, companies are looking at ways to reduce and recycle the material. Even as India generates 9,200 tonnes a day of plastic waste, companies under the extended producer responsibility clause have to recycle all waste.

For instance, India’s biggest FMCG player, the Gujarat Cooperative Milk Marketing Federation—which clocks a turnover of ₹53,000 crore under the Amul brand—consumes 2,500 tonnes of plastic a month. “We use virgin plastic for milk pouches and sell 30 million pouches daily. But [we] ensure that every month we recycle enough plastic to compensate for what we consume,” says managing director R.S. Sodhi.

Within the manufacturing space, automobile major Tata Motors is making plastic bumpers by using 100% end-of-life scrapped bumpers, besides doing away with paints on plastic components and using regenerated materials from industry waste for structural components.

Just like plastic waste, water conservation and recycling is another standard operating procedure that companies follow. According to Observer Research Foundation, manufacturing clusters generate around 13,500 million litres of industrial wastewater per day, but increasingly bigger players are treating and recycling water as part of their operations.

Auto major Maruti Suzuki India, which has 48% share of the passenger car market, uses canal water for most of its manufacturing processes to conserve groundwater and claims to have 11 lagoons at its Gurugram plant and five at its Manesar one. “Depleting natural resources and global warming are a fact. So, we have to address it, else businesses themselves will not be sustainable after a while,” says chairman R.C. Bhargava.

The dairy industry, which uses around 1.5 l-2 l of water for every litre of milk produced, is tackling the issue in no different fashion, “We have recharging wells and refill more than what we consume through conservation methods, including rainwater harvesting. Even water evaporation during the making of milk powder is converted into energy,” says Sodhi.

But the big push is visible in energy consumption.

Even as the government is considering uniform electricity pricing in India from April 2022, renewable power is finding its way into manufacturing operations.

Terming it as a cost-neutral strategy, Bhargava says the renewable investment pays off in four-five years depending on the project capacity. The Japanese car major had first set up a 1 MW solar plant at Manesar in 2014, which was ramped up to 1.3 MW in 2018. In 2020, it invested ₹20 crore for a 5 MW solar power plant at Gurugram and is now planning a bigger 20 MW solar plant in Manesar.

With 66.3 MW, renewable accounts for 20% of Tata Motors’ power consumption as well. “We also source off-site renewable energy at our Pune, Sanand, and Dharwad plants from third-party players,” says chief sustainability officer S.J.R. Kutty.

Commodity players, too, are going the whole hog. Aluminium major Hindalco has a captive solar plant of 49 MW and is aiming for 100 MW by 2022. “We don’t have a target to go completely renewable, but our ultimate aim is to become carbon neutral by 2050,” says managing director Satish Pai.

At some point, companies might need to ask: do we need to use fossil fuel at all?

One company trying to answer just that is Shree Cement. The Kolkatabased cement major had invested much ahead of the curve in renewables. “We are the biggest company in the whole of Asia, outside of China, to own 150 MW of waste heat generation capacity,” says managing director H.M. Bangur. Compared to thermal plants that cost ₹5 crore per MW, an equivalent unit via waste heat tech costs ₹12 crore per MW. “We are onethird the size of the biggest player, UltraTech, but are double their capacity in waste heat generation,” says Bangur. Recycling of residue is yet another area where companies are innovating.

Commodity major Vedanta is looking to walk the talk. “We embarked upon a journey to transform how we do business around 12 years ago. We committed to not only become the lowest-cost metal producer in the world, but to do so in the most sustainable way possible,” says group CEO Sunil Duggal.

For instance, Vedanta has an agreement with Runaya Refining for processing aluminium dross at its Odisha facility. “Runaya deploys technology-enabled sustainable solutions for evacuation and disposal of dross, one of the biggest challenges faced by the aluminium industry, in an environmentally friendly manner,” says Duggal. The green technology extracts 40% aluminium metal by weight from the dross.

Similarly, Jindal Steel & Power is the first company in India to build a coal gasification plant using indigenous coal and iron ore to produce both hot and cold direct reduced iron. “While the investment cost is high, the running cost is lower. But the important point is that CO2 emission is reduced by 40% through gasification,” explains managing director V.R. Sharma.

Currently, the company is procuring coal locally for its gasification tech. “If coal mines are solely allowed for gasification purposes, then the cost can come down further to $2.5/2.8 mmbtu, which is lower than the cost of gas sourced from the Middle East,” says Sharma.

Hindalco, too, is creating value from bauxite residue, the waste generated during the processing of bauxite into alumina. “We now supply bauxite residue to 40 cement plants in India, where it replaces mined minerals such as laterite and lithomarge,” says Pai. Engineering and construction major, Larsen & Toubro (L&T), too, has taken rapid strides. “We have cumulatively recycled 9,162 tonnes of steel and 634 tonnes of zinc in our operations.

We want to increase the use of recycled material by 5%,” says MD & CEO S.N. Subrahmanyan. While recycling does have its benefits, there is only that much that a company can do. “We make efforts to recycle our steel and zinc at our production facilities. However, as we are a project-based company, and most customer specifications insist on virgin material, the scope of using recycled material is limited,” says Subrahmanyan.

While the manufacturing sector is doing its bit with the 3 Rs, the services sector is ahead in the green curve.

According to market intelligence firm UnearthInsight, carbon emissions in India’s IT sector fell by 85% to 0.3 million tonnes between March 2020 and March 2021 compared with 2 million tonnes the year ago as less than 5% of the 4.4 million employees travelled to work.

What’s also helping IT score over its manufacturing counterpart is the nature of its services business. However, C.P. Gurnani, CEO, Tech Mahindra, believes that it all boils down to how companies and their leaders see sustainability. “We don’t have to incur any further additional capital beyond what has already been made [on sustainable initiatives]. Having said that, I believe sustainability is not that it comes easy for IT companies but has to be seen as a non-negotiable aspect of any business.”

While the services sector may have it easy, going green adds to costs and, in most cases, it is not a passthrough. “There will be a cost to pay for the society as cement certainly won’t come cheap if emission norms get stricter,” says Bangur.

Bhargava feels that ultimately it is the consumer who is going to bear the cost of the transition. “The only way to reduce cost for the customer is for a manufacturer to absorb it. But that is very difficult now as raw material costs are rising, then there is the forex issue, and not to mention higher taxation on cars, especially, at the lower end of the market. That’s where the customer is most hit by the green measures,” he says.

It’s not just automobiles where cost is a factor. Amul had started a pilot drive at its kiosks of urging customers to buy jute bags instead of plastic bags to carry the milk pouches. “Even at ₹30-₹40 a bag, customers were not willing to buy,” says Sodhi.

While the world wants to cool off by 2050, carbon emissions have to be halved by 2030. But how does that happen in a scenario when corporates are not committing to a defined target? “In defining our sustainability road map, we would draw from the salient features of the framework of the Task Force on Climate-related Financial Disclosures, but not limit ourselves to any one framework,” says Kutty of Tata Motors.

Corporate chieftains believe it’s not just India but even the West is coming to terms with sustainability. “Other than the top few, Indian companies are not at any different juncture in the cycle as compared to their counterparts abroad,” says Gopalakrishnan.

Singh of CDP, however, feels Indian companies need to get scientific about reaching net zero carbon through a mechanism such as the Science Based Targets initiative. “Declaring long-term goals without medium- and shortterm targets won’t serve any purpose. How quickly you are able to pivot will prove your sustainability credentials and that cannot come about without… moving away from BAU [business as usual] and enduring some amount of restructuring or pain,” he says.

But for pandemic-ravaged India Inc., getting back to business is a bigger pain than worrying about sustainability. ESG investors can keep asking questions, but the answers will take their time coming.

Look no further when at Berkshire Hathaway’s annual meet, where Warren Buffett scuttled resolutions on how the investment powerhouse was tackling climate change. Buffett’s stance was that he wanted to stay away from making “moral judgements” on businesses as it was “very tough” to decide which ones benefit society. That being the case, sustainability will remain a topic of hot debate—of doing good versus sounding good.

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