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Nipun OS

The author is a Sustainable officer at GPS Renewables

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Bridging Climate Goals And Action

ESG and climate action are often not well understood, and is often conflated with CSR. ESG is crosscutting and encompasses everything an organisation does. The true north of the ESG stance of a company should align with the true north of its business

“No snowflake in an avalanche ever feels responsible” – Of the many possible interpretations of this, a clarion call for climate action seems most plausible in these times.

At COP26, India announced its intent to become a net-zero emitter by 2070. It has backed this eventual goal through several interim measures including a recent update to its Nationally Determined Contribution (NDC). It is timely for Indian businesses to turn their climate goals into climate action.

Also, with ESG expectations increasing in prominence, this is a great opportunity for businesses to proactively adopt climate solutions and demonstrate positive climate action. However, adoption and implementation of climate solutions can be fraught with challenges. While supply side factors such as relatively lean funding for climate start-ups remain, there are many demand side factors at play that hinder mass adoption of climate solutions.

Climate awareness and expertise

ESG and climate action are often not well understood, and is often conflated with CSR. ESG is crosscutting and encompasses everything an organisation does. The true north of the ESG stance of a company should align with the true north of its business. Integration of ESG into decision making is not optional anymore. This alignment is critical and climate action is a strong lever. This understanding at all levels in an organisation is an essential trigger for climate action

To devise a robust climate strategy, businesses will need to zero in on climate issues and risks that are materially important to them. This can be done through a comprehensive stakeholder survey, and deriving a materiality map of business priorities against stakeholder priorities. This will enable businesses to select climate focus areas most relevant to them, develop a climate road map, and choose climate solutions that they should broadly focus on.

While materiality assessments give broad directional guidance, climate solutions market is fragmented, with hundreds of products at various stages of maturity. Information about options for climate action is also very dispersed, and the green claims made by companies about their products often need scrutiny. It requires considerable effort for a business to gather information about climate solutions that has potential, and are relevant in their context. This can be addressed to some extent by curation and aggregation services.

In addition to information access, there is a critical need for handholding and guidance. Climate change is an interdisciplinary issue. Most problems are multifactorial, and solutions tend to be technical in nature. Businesses need access to technical solutioning expertise so that decisions made on choice of climate change solutions are rigorous and data based. This needs access to a network of experts across multiple sectors such as water, air, effluents, waste, and energy. Such expertise is not easily available, is expensive and often time consuming. It is imperative that businesses address this knowledge gap by either investing in internal teams or by hiring technical consultants.

Funding and impact assessment

The value and impact of adopting climate solutions have to be viewed from an investment perspective. To take a purely cost based view of climate adoption would be missing the big picture. In some cases, the incremental value to business could be an increase in its ESG rating. In other cases, climate solutions open up additional revenue channels which can alter investment decisions. For example, if a business is investing in a bioCNG asset to substitute use of natural gas, the overall plant economics may be more favourable if we consider revenues from fertilizers and carbon credits. It is important to have an investment mindset to take judicious decisions in such complex scenarios.

Climate solutions also vary widely in their scope and utility. Consequently, the prices of these solutions can also fall in a wide spectrum. A garden composter can cost ten times that of an air purifier, and a forward osmosis solution can cost ten times more than a composter. Wherever affordability is an issue, financing can play a critical role. Asset financing climate solutions holds great potential in accelerating decarbonization initiatives. This can work very well for proven solutions.

Supply chain and operations

Businesses will need multiple solutions that fit their climate road map. Also, climate solutions are rarely available off the shelf, and will require customization to suit customer context. Supply chain managers will need the comfort of robust after-sales support too. Since the solution space is quite complex, any solution approach that addresses these eases these supply chain decisions can add real value.

To conclude, climate action is a multi stakeholder act with multiple moving parts. With the right set of actions from various stakeholders, some of the current challenges can be overcome. Climbridge, a marketplace that GPS Renewables support is one such attempt to create a one stop market place for tailored climate solutions. However, the enormity of challenge is such that collective action at various levels is the only proverbial silver bullet.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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