India is the world’s fourth largest emitter of CO2 and other greenhouse gases (GHG)[i]. Historically, the Indian government argued that caps on GHG emissions would stunt economic growth and that global warming was a problem of the industrialized world. However, over the last few years the government has pledged to reduce GHG emissions as the economic damages from climate change are estimated at 1.8% of India’s GDP annually by 2050.[ii] India now faces an energy dilemma as the first country trying to build an industrialized economy without substantially increasing carbon emissions. While most Indian companies struggle to understand climate change implications, one leads the discourse globally: the TATA Group of Companies (TATA).
TATA, one of India’s largest conglomerates (2015 revenues: $104bn[iii]), has businesses across power, automobiles, steel, and chemicals, making it highly susceptible to GHG emissions and climate change regulations. TATA’s businesses in the EU were required to comply with international treaties such as the Kyoto protocol, and on realizing the benefits of long-term mitigation strategies TATA expanded its climate change initiatives to its Indian operations. The move was also driven by a growing incidence of extreme weather events with inevitable emotional and business implications for the workforce and operations; and public pressure leading to tightened regulations and stronger action by the government.[iv]
TATA measures lifecycle emissions by extending the carbon footprint mapping across the entire value chain from vendors to equipment disposal. Its approach involves: 1) behavior change among its companies by incorporating climate change into their code of conduct; and 2) policies and initiatives designed by a steering committee to institutionalize climate change across TATA companies. TATA trains ‘Climate Change Champions’ within its companies on societal, environmental and economic implications of climate change. TATA policies require companies to 1) measure and project their carbon footprints and benchmark within their industries 2) adopt aggressive abatement actions to reduce lifecycle footprint and drive growth through innovation, and 3) engage in climate advocacy, and build a low-carbon culture through processes and systems.
Select Performance Indicators (to-date)[v]
- 51 TATA companies estimated their carbon foot print and developed carbon strategies that involve constant monitoring, and adoption of energy-efficient systems such as variable frequency drives for motors, waste heat recovery systems, and green data centers
- 400 Climate Change Champions trained
- Tata Capital Cleantech established to fund green initiatives
- Tata Power, one of India’s largest renewable energy producers, committed to generating 40% of its electricity from non-fossil fuel sources by 2025
TATA’s Climate Change Competencies
TATA leverages its global network to bring best practices to India. For instance: Tata Motors was the first Indian company to introduce vehicles with Euro-norms. It formed a joint venture with Cummins Engine, USA, to introduce emission-control technology in India.[vi]
TATA acutely recognizes the need for localized solutions. TATA aims to tackle India’s energy challenge through a combination of distributed solar power, local microgrids, and renewable-power plants (since just grids cannot reach every village, and a modern manufacturing base cannot be built using unpredictable distributed solar power). TATA is designing state-level solutions and is already experimenting with MIT in the state of Bihar. [vii]
TATA represents India globally and demonstrates India’s willingness to adopt global sustainability standards .Ratan Tata, TATA’s Chairman, was the only Indian among several leaders who called on governments and businesses to commit to net-zero GHG emission by 2050 at the 2015 UN climate negotiations.[viii] Several Tata companies undertake sustainability reporting consistent with the global reporting framework, UN Global Compact.[ix]
Balance mitigation with adaptation
Most TATA resources are currently directed towards reducing emissions, which inhibits adaptation initiatives. TATA must identify synergies between mitigation and adaptation and incorporate both into its policies.
Evaluate the needs and standards for individual businesses
As a conglomerate, TATA faces the challenge of designing climate change policies for its diverse businesses. A TATA manager described the challenge of internal carbon pricing: “You could base it on the cost of mitigation, but that cost varies significantly by industry: for a software business, it could be $7-$8/ton, whereas for a steam plant, it would be much higher.”[x]
Collaborate with and advise the government on engaging more private sector players
Aspects of adaptation can be delivered by the private sector, but government’s support is critical in areas of climate forecasting systems, research on climate change impacts, and making renewable energy affordable and accessible through financing and credits.
Promote a business case for climate change
Drivers of energy efficiency initiatives, including cost savings, carbon footprint reduction, and energy security, make attributing decisions to climate change difficult. Adaptation activities are often labelled as ‘business continuity, risk management and resilience’. To encourage action on climate change, TATA must frame climate impacts in terms of cost, risk and resilience, to appeal to the business community, while also widely sharing its best practices.[xi]
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[i] Olivier JGJ et al. (2015), Trends in global CO2 emissions; 2015 Report, The Hague: PBL Netherlands Environmental Assessment Agency; Ispra: European Commission, Joint Research Centre.
[ii] World Resource Institute http://wri-india.org/our-work/topics/climate
[iii] TATA Group Financials: http://www.tata.com/htm/Group_Investor_GroupFinancials.htm
[iv] Tata.com. (2016). Addressing climate change. http://www.tata.com/sustainability/articlesinside/Addressing-climate-chang.
[v] Power Insight (2016), Indian Power Sector Review, 2015-2016. Tata Power bags 100MW solar project in Karnataka. https://issuu.com/visionmediagroup/docs/e_copy_pi_7th_annual_2016; Livemint, (2016). The Tatas’ sustainability journey. http://www.livemint.com/Companies/cFyGLrBfG39BNx0jBolZAO/The-Tatas-sustainability-journey.html.
[vi] BusinessLine, (2012). How Tata Motors is going green. http://www.thehindubusinessline.com/companies/how-tata-motors-is-going-green/article4019538.ece.
[vii] MIT Technology Review, (2015). India’s Energy Crisis. MIT. https://www.technologyreview.com/s/542091/indias-energy-crisis/.
[viii] KPMG, (2015). COP21/PARIS 2015 UN CLIMATE CHANGE CONFERENCE: What does it mean for business?. https://www.kpmg.com/IN/en/Documents/KPMG-COP21-Briefing-WEB.pdf.
[ix] Livemint, (2016). The Tatas’ sustainability journey. http://www.livemint.com/Companies/cFyGLrBfG39BNx0jBolZAO/The-Tatas-sustainability-journey.html.
[x] Bloomberg, (2016). Putting a Price on Carbon Brings Extra Challenges for Conglomerates, Tata Says. Sustainable Finance. http://www.tatasustainability.com/images/feature-stories/Q&A_Shankar%20Venkateswaran_Bloomberg.pdf.
[xi] Center for Climate Change Economics and Policy, Grantham Research Institute on Climate Change and the Environment, (2014). Taking an organisational approach to private sector adaptation – the case of Tata Teleservices in India. http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2014/11/Working-Paper-171-Steeves-and-Surminski-2014.pdf.