Five sectors fuel emissions, half fumble on renewable energy in FY23

A handful of large sectors accounted for the majority of emissions from listed companies in 2022-23 (FY23).

Power, metals and mining, construction material, chemical, as well as oil, gas and consumable fuels collectively contributed to 90 per cent of emissions. 

This analysis is based on data from 1,040 listed companies compiled from their annual reports by EY India and shared with Business Standard. These companies emitted 1.26 billion metric tonnes of carbon dioxide equivalent (MTCO2e) under Scope 1 emissions and 0.14 billion MTCO2e under Scope 2 emissions in FY23.

Emissions made directly from sources owned by the companies fall under Scope 1, while those undertaken indirectly — such as the purchase of electricity from external sources — fall under Scope 2.

The data also revealed a concentration of other critical environmental factors, such as water withdrawal and waste generation.

“The pathway to global net zero must pass through India, as the majority of the country is yet to be developed. We are beginning to witness pockets of excellence in climate action. The energy transition is one of the largest transformations of our time and will provide a competitive advantage for Indian companies,” said Nitesh Mehrotra, partner, sustainability, and environmental, social and governance (ESG) at EY India.

The data shows that 71 per cent of companies have projects focused on reducing greenhouse gas emissions.

“Companies can undertake various initiatives, including investments in renewable energy, green jobs training, energy efficiency improvements, and a shift toward a low-carbon growth trajectory,” said Amshika Amar, associate Fellow at the Centre for Social and Economic Progress.

For example, Tata Motors is expanding its range of electric vehicles and investing in non-fossil energy sources to meet its demand. All fast-moving consumer goods (FMCG) companies, which heavily depend on raw materials from the agricultural sector, are adopting more sustainable agricultural practices and climate-smart farming practices such as water-saving techniques, irrigation devices, organic pesticides, and fertilisers, she added.

Other companies, like JSW Group, have announced their goal of becoming carbon neutral by 2050. Reliance Industries has set a target of achieving net zero carbon by 2035. Last month, NTPC and Oil India signed a memorandum of understanding to collaborate in areas like renewable energy and green hydrogen.

In total, companies withdrew 14.4 trillion litre (tl) of water, with 8.6 tl coming from surface water and 0.5 tl from groundwater, and the remainder from other sources.

The power sector accounted for 78.6 per cent of this withdrawal, followed by metals and mining (5.3 per cent), and oil, gas and consumable fuels (4.2 per cent). Chemical and construction rounded out the top five. 

The companies generated 363.2 million metric tonnes of waste, of which 4.1 million metric tonnes were plastic waste. Power, metals and mining, capital goods, FMCG, and chemical collectively contributed to 95.1 per cent of the waste.

Approximately 275 million metric tonnes of waste were reused, recycled, or recovered.

Indian companies play a pivotal role in driving change toward achieving the country’s environmental targets, said Amar.

In addition to ESG frameworks, the Securities and Exchange Board of India should also introduce evaluation frameworks to measure the impact of climate policies implemented by Indian companies, she added.

These companies sourced 28 per cent of their energy from renewable sources. Healthcare, FMCG, and utilities consumed over 70 per cent of their energy from renewables. In contrast, metals and mining, chemical, telecommunications, and power lagged behind, with less than 1 per cent of their energy consumption coming from renewables. Eleven of 22 sectors had less than 10 per cent utilisation of renewables to meet their energy needs. 

“Many companies are adopting climate-smart policies; however, the challenges are huge for India, and more work needs to be done,” said Amar.