Group3_B | SDG 13: Climate Action
Introduction to the SDG
Earth's climate has changed through its history but the pace at which it has changed has been expedited because of the rise in human activity since the mid-20th Century [1]. Carbon dioxide released by human activity has increased more than 250 times faster than it did from the natural sources after the last ice age [2]. The harmful effects of climate change are felt across the globe as there is a rise in global surface temperatures, sea levels and a number of extreme weather events. Sustainable Development Goal (SDG) – 13 is focused on acting against climate change. The goal of SDG-13 is to make communities more resilient against extreme weather conditions to reduce the detrimental impact of weather hazards. This must be achieved by creating national and international policies, researching more about climate change, and strategizing collaboratively to adjust to higher temperatures. At the same time, education and awareness must be improved to sensitize global populations about the graveness of this issue.
The onus of executing this SDG is not just on governments but also on businesses. For businesses to thrive they need a stable natural environment and customers who have the resources to purchase and consume the company’s products or services. A commitment is needed from both governments and companies in form of effective environmental strategies and policies to limit the rise in global average temperatures. The 2015 Conference of Parties (COP-21), in Paris, was a monumental step in this direction towards fighting climate change. The objective decided from the meeting was clear: global carbon emissions need to be reduced to keep warming below the 2 degrees Celsius threshold. Although industry activity is concentrated mostly in developed nations, developing countries are most impacted by climate change and are least able to afford its consequences [3]. Due to their financial constraints, their ability to prevent and respond to impacts of climate change is limited.
Relevance of SDG to India
With a billion-plus population and a pool of talent, India is emerging as a potential global powerhouse. Having achieved laurels in the service sector due to the low cost and high quality of human capital in the previous two decades, the government's focus from the last few years has been clear: to make India a manufacturing giant. Campaigns such as the Make in India, Performance Linked Initiatives (PLIs), or the massive rail and road infrastructure overhaul stands as a testimony to this fact.
As India seeks to climb its way up the ladder of prosperity using industrialization as a plank, successive governments have not been shy in publicly advocating the large-scale use of non-renewables to achieve this goal. [4] This is also because India's total and per capita carbon emissions at 2.65GT and 1.95T are no match to the US, Chinese and European levels. [5] Although, these numbers mean that India is the only large country that is well within touching distance of its 2015 Paris accord obligations [6], it is also an undeniable fact that the country is also home to six of the worlds' ten most polluted cities. If this coal usage goes on to be rampant and unchecked, it can further exacerbate the situation in many more parts of the country. Apart from emission levels, India's forest cover is also a moot point in the agreement, and an eyesore for the country as it lags these same higher polluters by quite a margin as the total forest cover of India barely touches 25% as opposed to a global average of 31%. [7]
As India readies itself to embrace industrialization like never before, checks and balances need to be brought in place. The real effects of the rising non-renewables' consumption may not be felt today due to a lag in actions and climatic conditions but are sure to be disastrous if kept unabated.
Business Implication
Climate Change already started affecting businesses, and this impact will continue to amplify further in the future. The immediate effects of climate change are already menacing the viability of existing business practices like infrastructure, agriculture, and construction. However, it is also paving the way for new business opportunities. For instance, a survey revealed that 51% of consumers are willing to pay a premium for a product manufactured by a company "that is known to be environment-friendly" and this percentage comprises mostly of younger consumers [8]. Investments in sustainable and energy-efficient technologies are also helping companies in cost-saving. For instance, Walmart claims to have reduced its energy usage by 20% by powering 25% of its operations with renewable sources, thus saving $1 billion. [9]
However, climate change and variability have had an adverse impact on agriculture. High temperatures, water scarcity, and extreme weather conditions have resulted in the crop season's extension, lower yield, higher variability, and reduction of cultivable spaces. Some of the largest firms have switched to sustainable fishing and farming practices owing to the threats to key commodities like fish, tea, and cocoa. Moreover, many firms believe that this threat would eventually become a public relations liability if they do not act soon. Firms like McDonald’s spearheaded a comprehensive effort to preserve the Amazon rainforest [10], and Unilever co-founded the Palm Oil round table conference in response to deforestation allegations by NGOs [11].
Climate change also provides ample opportunities for businesses to mitigate and adapt. Some firms have modified their pricing plans for properties based on region and the intensity of risk posed on such buildings in the insurance industry. For example, a property situated near seacoasts is more prone to coastal erosion because of climate change and is therefore charged more for insurance. Companies like Microsoft set a carbon price to business groups that utilized their services. The funds raised were then used to invest in energy-efficient resources and carbon offset projects. [12] In infrastructure and urban planning, the Smart City solutions like underground pipes, preservation of green spaces, etc., are implemented to reduce carbon emissions. In construction, new buildings are designed with better energy efficiency. As the world's emissions continue to rise, a globally concentrated mitigation effort from the businesses is required to bring in a systematic change.
Response from Businesses
As many as 24 top private companies, including TATA, Reliance, Mahindra, ITC and Adani with collaboration with the government signed a declaration on climate change to take India towards “Carbon Neutrality”.
At India’s CEO Forum on Climate Change [13], the leaders from the industries shared the strategy to take the country to “net zero-emission” goal through nine specific mitigation measures aligning with India’s commitment under the Paris Agreement. The nine mitigation measures listed by the companies include the promotion of renewable energy, enhancement of energy efficiency, water-efficient processes, green mobility, planned afforestation and waste management & recycling.
Swiss packaged food company, Nestle, committed to investing 3.2 billion Swiss Francs [14] over the next five years to accelerate its efforts to halve its emission by 2030 and net-zero emission by 2050. It also committed to moving to 100% renewal energy by 2022.
Incentivizing the efforts is the need of the hour. Top managements have integrated these concerns in the performance evaluation of key personnel - nearly 90% provide incentives to senior staffers to help meet targets, 71% provide monetary rewards and 65% give non-monetary rewards for recognizing, monitoring, and overseeing progress in climate-related targets.
The most common governance mechanisms in companies that have integrated climate issues in their business strategy are shown below [15]:
Not only big corporate houses but also SMEs and startups are participating in this fight against Climate Change. Startups are changing the dynamics [16] by disrupting the norms and fueling the pace of efforts through contributing to clean energy, low carbon technology, recycling, waste management and many more.
India’s response to Climate Action
Source: Down to Earth’s State of India’s Environment 2020: In Figures
Some of the steps taken by Indian government are as follows. [18]
International Solar Alliance (ISA): India launched ISA with the French Government on the sidelines of CoP 21 in 2015. The idea is to have an alliance of solar resource-rich countries between the tropics. Headquartered at Gurgaon, ISA will open opportunities for businesses to expand in this sector while ensuring the maximization of sustainable energy generation.
National Action Plan on Climate Change: The plan covers 8 major missions on Solar, Enhanced energy Efficiency, Sustainable Habitat, water, Sustaining the Himalayan ecosystem, Green India, Sustainable Agriculture and Strategic Knowledge on climate change.
FAME scheme for E-mobility: in 2015 itself, the government launched Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) – India scheme to promote the sales of electronic vehicles in India. With companies like Tesla and Google taking lead, schemes like these opens avenues for existing and new manufacturers to go for technological updates and shift to more sustainable channels. [18]
There are many more steps that the government has taken so far, especially in the last 5 years, to fight climate change. Taking steps is, however, not worthwhile if the results are not favourable. In this case, they are. It was announced in December 2020 that India has achieved 21% of its emissions intensity as a proportion of its GDP, out of the 33-35 % to be reduced by 2030. [19]
Suggested Path Ahead
More than 65% of climate change is due to carbon dioxide, and the key areas to be targeted are electricity (power), and industry. [21] With these in mind, several conferences and agreements have been signed on a global scale, yet there is a lot of ground left to cover.
When we think about electricity and energy, most of the world still runs on fossil fuels. Ideas like carbon taxes and carbon credits have been around for more than a decade in some parts of the world, but legal loopholes have served to render them ineffective at times.
India stands at rank 3 when it comes to total carbon dioxide emissions globally [22]. According to the Paris Agreement of 2015, India pledged to cut its fossil-fuel driven power-generation to just 60% of its overall generation capabilities. As of today, renewables satisfy a whopping 38% of India’s power needs. [23]
On a global front, there has been a massive push towards renewables and nuclear energy in countries like France and Germany. In fact, Iceland has the distinction of being the only country in the world that runs on 100% renewable energy [24]. Germany sources more than 65% of its energy from renewable sources [25], while France is the leader in nuclear energy with it sourcing ~75% of its energy output. [26]
When it comes to industry, many companies have taken it upon themselves to commit to sustainable growth models. Several companies have a Chief Sustainability Officer, and this trend is picking up. 44 companies in the USA had CSO’s in 2018, and that number has been growing rapidly since. [27] Policies by the government, like the Clean Air Act in the USA or the National Clean Air Program, launched in 2019 in India, are all passed with a view to check the rampant pollution by industries. Brazil, home of the Amazon, has committed to reducing illegal deforestation to 0 by 2030, besides other promises. However, politics has reared its ugly as the Bolsonaro government has taken several steps in the wrong direction by cutting funds, decreasing the number of officers, and crippling the internationally funded Amazon Fund. [28]
As a final word, there are large-scale efforts on government, company, and private levels to combat climate change. Awareness is ever-increasing, yet the voice of the “deniers” has been getting louder as well. The major roadblocks faced are profit-seeking companies, who value their bottom line over their ecological impact and governments that are part of the “climate deniers” brigade. We must do our individual part and hope that the commitments made to the UN are honoured, and the timelines for saving the planet are met.
References
[8] https://www.nielsen.com/us/en/insights/article/2015/green-generation-millennials-say-sustainability-is-a-shopping-priority/
[9] https://www.retaildive.com/news/why-wal-mart-is-a-retail-sustainability-leader-but-doesnt-really-want-to/423713/
[10] https://corporate.mcdonalds.com/corpmcd/our-purpose-and-impact/our-planet/conserving-forests.html
[11] https://www.rspo.org/members/107/unilever
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