100: Climate disclosure imperatives for India: Prarthana Borah, India Director, CDP

The Elephant in the Room

Shownotes

Most of the narrative around climate change, net zero, SDGs is framed from a global north perspective. Most of the studies (90% or more) on climate change are by academics and institutions based in the global north - primarily North America, Europe and Australia. Ironically the countries that have contributed most to global warming. Not only is there a lack of diversity in the current discourse but crucially there is a missing perspective from some of the poorest regions of the world, that have the biggest impact of global warming.

At The Elephant in the Room, I am attempting to give platform to some of the voices that can help broaden the perspective. In this episode I spoke with Prarthana Borah, India Director for CDP and an expert on climate change, air pollution conservation, environmental education. When we were discussing the episode, my one line brief was to keep our conversation relatable - we were not going to use jargon, rather use language that most people can understand.

The aim of course was to learn, and enable others to understand the language around climate change. In the episode we spoke about Prarthana’s incredible career in environment, conservation, clean air, CDP and its work in India, the CDP Annual Disclosure Report 2021, climate change, climate disclosure imperatives (India context), challenges, BRSR, greenwashing, ‘beyond compliance’, best practice. We also spoke about…….

As we discussed in this episode climate disclosure is not an and/or question. It is about business risk and resilience, it is about having a long term view and business sustainability….The top 1000 in India have to mandatorily report but what about the 100s of thousands of companies who are not being nudged by legislation in India… what is going to be the impact of not being ready for climate disclosure on NDCs??

Memorable passages from the podcast

👉🏾 So firstly thank you to The Purpose Room for having me here and I'm really excited, this happens to be my first podcast. So my name is Prarthana Prarthana Borah. I am the India Director of CDP. For those of you who don't know, CDP is a global not-for-profit primarily working in disclosures. We are headquartered in the UK, but we work on a subsidiary model. So we work in almost 60 countries with offices in North America, South America, India, and a large presence in the Asia Pacific region.

👉🏾 Personally, I would like to call myself an environmental educator, and I've been in the space for almost 30 years now. Started with conservation, nature education, moved on to sectoral areas of work. Started with first climate and then air pollution, and then back to climate again. Now in the last couple of years working specially with the business community to what I would say drive climate action, understanding of environmental issues and promoting sustainable business models with the help of disclosure.

👉🏾 So I think every organisation working in the environmental space, or especially in climate, would have to have a large ambition for the global south. And if we talk about the global south that two countries which have the highest emissions and also are capable of making the largest positive environmental impact are India and China. So I think like every other organisation working in this space, CDP has I must say, It does have an ambition for India and the very fact that we have a growing country office, and a growing ambition from the point of view of looking at more and more industry to convince them to adopt our disclosure process, as well as start thinking about the transition to net zero.

👉🏾 I think that itself is an ambition. As far as India is concerned, if we look at our work, I think over the years, we began in India almost 11 years back. So we were established in around 2012. We started with very few companies but today that number is almost a 130 plus companies, which kind of disclose to CDP in India, work with us. About 60 odd companies are working with us to set their science-based targets and look at net zero transition. CDP works in climate, water, forest disclosures, and in our initial years, we would see there was a lot of interest in climate disclosures.

👉🏾 But today we see that more and more companies are becoming interested to talk about security issues. The Indian business ambition for India in terms of how much they want to contribute to environmental issues. And I'm saying environmental because I think it's more than just climate just now. It's going beyond, you see companies wanting to contribute to biodiversity. We are going to be including plastics as an area for disclosure from this year.

👉🏾 Although it's voluntary this year, we see there's a lot of interest in people wanting to contribute to that. So I think the ambition is not just in terms of volume, but also in terms of looking at an integrated view of environment. So it goes beyond just carbon disclosure. Today we are going into water, forest and overall environmental disclosures.

👉🏾 So Sudha I must say I was a bit worried when I saw that question because I think as you said, , from a layman's perspective, it needs to be interpreted right. And if it is mentioned in our report, then I must say when we talk about, something like, india is already on track to meet 2030 emissions target, we are actually referring to the sample, based on the sample, and it's an inference based on the sample.

👉🏾 So if you see what has happened in this last year, the Prime Minister announced in the COP 26 that India's net zero target would be 2070. And there was a lot of discussion around that, that it's too late for us. But if you see what has happened in the last couple of months is that India has revised its NDCs, that's the nationally determined contribution. If you just look at that, we are talking about, 50% of our energy coming from renewable sources. That is the kind of commitment that we're looking at. So if you're thinking about that kind of commitment, we are actually moving towards being on track because a country like India, I think makes such a commitment itself, is the commitment that is required.

👉🏾 But coming back to a question on whether we are aligned or not, this is based more in terms of what corporate India is. So if you look at the targets that are being set by a country are also reflected in the business community because where is the emissions coming from and a large amount of emissions is actually coming from business or from industry, and of course we also do city disclosures, so we are also measuring the city emissions. So if you look at some of that, there are some kinds of interpretations that actually lead us to think that we are on track. For instance, if you look at some of our, corporate disclosures, we see that most companies have emission reduction targets. that they are on track in terms of setting a target, getting a target validated. Almost 60 percent of the companies that are disclosing to us have emission reduction targets, and they have net zero transition plans. So from that perspective, it looks like we are on track because it means that companies and businesses started thinking about it.

👉🏾 But if you look at the overall country in a holistic manner, then I'm not sure if we can say that we are on track because there are a lot of other things that need to be addressed. And the complexity of addressing this is where the discussion needs to focus on, so we basically need to engage in a conversation which talks more about how to, rather than why not. So I think we are all aware, I mean, since you said right in the beginning that this is a layman's conversation. I wanted to also say that we are all aware that the whole climate discussion is very closely related to the energy discussion.

👉🏾 And I think the controversy as far as India's concerned, is basically the discussion around coal and our dependency to coal. And that I think is our biggest challenge, how do we transition away? So which is why as I said in my last response, that to actually commit that 50% of the energy that we would be using would come from renewable sources is a large commitment. But what is gonna happen with the rest of the 50% is what we should be concerned about. And I think one of the biggest challenges that is there and this is because as CDP also, we are now trying to really work in this whole area of financing for climate. I think finance is something that we must discuss and talk about in a manner that is not just proposing things, but also to look at how we could build internal capacities to generate this kind of finance.

👉🏾 And I'm going to talk about a very practical example when we discuss about this. For a country like India, we are still at a very nascent stage as far as climate financing is concerned. And I want to give an example. Let's look at, say, the investor market. I mean an organisation like CDP globally has about 700 investors who use our data to look at companies, how companies are assessing climate risks, are looking at climate opportunities, looking at energy transition. But within that sample we have very few Indian investors. So I think the Indian investor market is still not discussing. I mean, let's look at Indian banks for instance, are they really looking at risk assessments? Because unless you really push that side, which is very closely linked to the whole aspect of financing, because unless you understand the importance of energy transition and you link financing to it, we would not be able to kind of reach the goals.

👉🏾 So I think it's not just about a policy because we talk a lot about the policy part of it, but we don't talk so much about the operations part of it. And the operations part is where, the financing comes, and where is the fund going to come to ensure this transition. That's one. The second is of course, Energy transition means technology transition.

👉🏾 And there again, a country like India would need support because we're not really, a great place for research, we are not a great place for, developing new technology, innovative technology. So I think that's one area, and even if we are, we come back again to the whole financial models because the newer companies and newer startups, for instance, are trying to get into the space, but it's not happening again because it again needs investor interest. So that is the second, and the third is, I think for our country the social aspect plays a very important role. I mean transitioning from coal is also talking about the people who are actually employed on the ground and what is going to happen to them. So that's again, a different story. So I think it's good that this COP, there was a discussion on ‘just transition’ and they're talking about things like how do you include just transition in this whole process.

👉🏾 And we are talking about a loss and damage fund and all these kind of things which are more relevant to the Africas and some of our Asian countries. So I think if I had to put the hurdles in three boxes, it would be first the financing, which actually becomes cross-sectional and the larger kind of an umbrella. And then feeds into the technology as well as these areas which are looking at the social issues like employment generation, resilience and some of the terminologies that we use. But it's basically about the people who have been engaged in the not so clean areas of providing energy, how do we deal with their growth or their transition.

👉🏾 I just wanted to add that, I think one of the challenges when we are dealing with say, climate issue is the fact that we cannot see it in a box. It's correlated to so many other areas, so it's important to look at it holistically. And I think it's very challenging for India because on the one side we can do a lot when it comes to being a leader in innovation, looking at new ways of doing things, and instead of just adopting what is being done in many of the countries which are much ahead of us.

👉🏾 So I think of the areas where we need to really look at it is, I would say is not vehemently opposed the transition, but find your own way to kind of do the transition basically. Because I think the alternative method is what we should work in. And that is where probably we need a little bit of investment as a country on the research, the knowledge, the indigenous knowledge and carve out our own pathway rather than rely on or cry out loud for what we are not getting from the global north. If we spend a little bit of time in looking at how we could create our own models in the transition, that would work better.

👉🏾 And I think the corporate sectors is really doing that well. If we look at, say we have a climate leadership client and we analyse, the energy transition models they're working on. And unfortunately as an organisation, we are not analysing our data enough because we are responsible for generating the data. So by the time we finish generating one year, we are regenerating it for the next year. So we are so busy in upgrading our data that we don't analyse it enough. But I often say that, if you look at the 2022 report, 90% of the companies have senior level governance involved in climate transition, which is huge for a country like India. That means they have someone in the board who's actually thinking of climate related transition.

👉🏾 Similarly 90% of the companies have emission reduction projects. Now, it'll be very interesting to see what are these emission reduction projects, assess this emission reduction projects and see if some of these are replicable. I think those are India models that need to be delved deeper into. So I think while there are the hurdles, I think what is required is a little bit of an out of the box thinking. And our narrative is so much on.... I don't want to use the word complain, but it's basically so much on that, we cannot do it, that we are not thinking enough on how do we try and do it. But we use our own method of addressing these issues and discover our own way of addressing major issues.

👉🏾 I think, maybe globally disclosure has a lot of acceptance. So you don't probably think about it as much, but I think for a country like India, we need to understand that disclosures is a new concept. If you look at even CDP or a GRI, although we've been around for more than a decade our sample is very small in terms of addressing it. And most of these companies are companies who have a global presence. So usually when you talk about disclosure, the word itself scares you off saying that, oh, what are you supposed to disclose. And it's always has a negative implication because disclosing means, you're telling people something that is not good for the organisation or not good for you. But I wanted to really highlight that the best part about disclosure is that it allows you to review your internal strategy.

👉🏾 And I think if you ask the companies who disclose to us the reason that they continue to disclose to us is that, It gives them the time and the technical process, the indicators and the benchmarks to review their internal process. So if you look at a CDP climate disclosure, for instance we have five sections. So the first section looks at governance models that you have, which can review how much of your governance is involved in the climate disclosure process. The second section is on emissions. So it talks about how much emissions are you emitting and are you releasing?

👉🏾 So what happens is that if you do not have an emissions inventory, you start looking at how to do it, and then you start doing it and you start assessing your own emissions. We have a section on energy, so it talks about what kind of energy transitions, what is your energy consumption, what is your scope 2 emissions. So you start reviewing all these things and then the most important part, which I feel that even businesses look at it as an advantage from the business perspective, rather from the economics perspective, more than the environmental perspective, is the assessment of risks and looking at opportunities.

👉🏾 And when I say assessment of risks, companies start looking at their value chains which is also another section, in terms of raw material sourcing. Now, when you are doing a disclosure, you try to understand where your raw material is coming and what is the risk associated with these weather changes that are happening. So there are simple introspection issues that come in which actually are converted into numbers, and you are able to assess your company's risks from climate and then you have also the opportunity to convert it into an opportunity. So then it's a double opportunity. So basically, what are the opportunities?

👉🏾 Like for instance, we look at last year's data, the opportunities identified by the Indian companies, the 130 odd Indian companies that have disclosed to us, was 10 times more than 2021, and if you delve deeper into it, there are opportunities actually identified in energy transition. So people think it's an opportunity to move from traditional energy sources to newer energy sources, new and renewable energy sources.

👉🏾 And hydrogen, for instance, has been identified as a large opportunity. So the figures have shot up tremendously. So I actually would like to say that in disclosure, there's a business opportunity, and that is the biggest imperative, whether it's for the private or for the public sector, because I think you are able to assess and look at newer models in your business process, in your operations, as well as your value chain engagement.

👉🏾 So I think there is an organisational priority in why this number is less, because we also wanted to emphasise on the quality of disclosures so that we have the right kind of data and we avoid people just disclosing for the sake of disclosing. So actually, traditionally we've kept our samples small. So as far as India's concerned we had, over the last 10 years, the largest sample that we had was 200 listed companies in the Bombay Stock Exchange. So it was a conscious choice, but if you look at it as you've said, they implemented the BRSR this year and the sample was 1000.

👉🏾 So we've increased our sample to 1000 also because we wanted to align it, which means that we have now a larger sample to deal with. So I think the nudge would be the regulatory push because so far the companies disclose to CDP because investors use our data. And it's completely voluntary, but now with the regulatory push they would be automatically disclosing under BRSR. So I don't know, they would just be motivated to disclose to CDP because you know, okay, we are already disclosing here, so we have the data, why don't we put it there so investors can use it?