August 2022 - Ambitious climate action from all actors is the need of the hour. While there has been significant focus on climate change mitigation and adaptation efforts by national governments through policies, projects, and mechanisms, their actions must be complemented by efforts by the private sector.
For the private sector, climate change poses significant threats. Risks include physical damages (assets might be damaged or destroyed due to climate change-induced extreme events), supply chain disruptions, policy/regulatory changes, and shifting consumer demands, among others. Investors are also increasingly demanding climate disclosures on climate action from their companies to measure the investment risk due to climate change impacts. Therefore, businesses are integrating climate risk in capital allocation, future investment decisions, developments of new products/services, etc. to build a resilient business. Apart from mandatory regulations they are subject to, several private sector players are leading the way through Voluntary Climate Action (VCA). For example, at COP26, nearly 500 global financial services firms controlling assets worth $130 trillion – some 40% of the world’s financial assets – committed to aligning their financial activities towards a 2050 net-zero trajectory. Due to their financial bandwidth and a greater appetite for innovation, businesses are key players in reducing GHG emissions.
Recognising their role in global and Indian climate action, Confederation of Indian Industry (CII) and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH undertook a two-day consultation with 40 Indian businesses to document the challenges and opportunities that leading Indian private sector players face in adopting VCA tools in business operations. The initiative was part of the Indian chapter of the Global Carbon Markets project, implemented by GIZ on behalf of the German Federal Ministry for Economic Affairs and Climate Action (BMWK).
The consultations documented the present status of VCA in India by the private sector, with a key focus on Voluntary Carbon Markets (VCM), and Internal Carbon Pricing (ICP). It also documented challenges, opportunities, and recommendations to increase the adoption of VCA tools, particularly VCM and ICP in India. The proceedings of the consultation have been documented in GIZ India’s latest publication, which may be accessed here.