Sustainability Roundup 2022

COP27

• At the Sharm el-Sheikh Climate Change Conference (COP 27), countries came together to take action towards achieving the world’s collective climate goals as agreed under the Paris Agreement and the Convention. The conference took place from 6-20 November 2022 in Sharm el-Sheikh, Egypt. The Indian delegation at COP27 was led by Bhupender Yadav, the environment minister. Some major items on India’s agenda were clarity on definition of climate finance, convincing developed countries to on a global climate change adaptation fund target after accounting for rising costs, push for adoption of PM Modi’s mantra of Lifestyle for Environment (Mission LiFE).

• Launch of the ‘loss and damages’ fund for climate reparations: To compensate vulnerable countries for damages from climate-linked disasters, delegates at COP27 agreed to establish a ‘Loss and Damages’ fund. Other recommendations on how this fund is to be managed and funded, and the quantum of contributions from large countries have been left to a ‘transitional’ committee that will make recommendations in this regard at COP28 to be held in the United Arab Emirates in 2023. 

• India submits its long-term low emissions development strategy: Complying with Article 4, paragraph 19 of the Paris Agreement, India submitted its long-term low emissions development strategy to the UN Framework Convention on Climate Change at COP27. India’s strategy is based on the themes of ‘climate justice’, ‘sustainable lifestyle’ and principles of equity and common-but-differentiated responsibilities and respective capabilities. It is also informed by Mission LiFE that calls for a shift from consumption to mindful and deliberate utilisation. 

Conference of Parties 15 (COP15) meeting to the UN Convention on Biological Diversity 

• Summary of the COP15 meeting: The COP15 meeting to the United Nations Convention on Biological Diversity concluded on 19 December 2022 in Montreal, Canada. The ‘Kunming-Montreal Global Biodiversity Framework’ (Framework) was adopted. Key outcomes of the Framework include: a)  commitment to  protection of 30% of land and 30% of coastal and marine areas by 2030 (30 by 30 goal to prevent species loss); b) ensuring USD 200 billion is put towards conservation initiatives from both public and private sources – wealthier countries should contribute USD 20 billion each year by 2025, and USD 30 billion by 2030; c) delegates agreeing on large companies and financial institutions being subject to disclosure requirements on their operations to promote biodiversity, reduce risks posed by businesses and encourage sustainable production; and d) commitment to identifying harmful subsidies that affect biodiversity by 2025 and eliminate/ phase out or reform them. 

The cost of sustainability 

• Meeting India’s 2070 net-zero emissions target would require USD 10 trillion investment: According to a study by the ‘High-Level Policy Commission on Getting Asia to net-zero’, an investment of USD 10 trillion, starting from 2022, would be needed for India to achieve the net-zero emissions target by 2070. And if the deadline is advanced to 2050, then the investment required is USD 13.5 trillion. It also states that the economic benefits of India moving towards climate neutrality by 2070 will boost annual GDP up to 4.7% by 2036, and create 15 million new jobs by 2047. If India were to target 2050, then it could boost annual GDP by 7% and create 20 million jobs by 2032. 

• India needs to invest USD 12.1 trillion to achieve carbon neutrality by 2050: According to a report released by McKinsey & Co, India will need to invest around USD 12.1 trillion to achieve carbon neutrality by 2050. Effectively, this would require India to dedicate 5.9% of its GDP towards climate finance. Separately, a United Nations Environment Programme (UNEP) report states that India’s per capita greenhouse gas emissions (at 2.4 tCO2e) were far lower than the world average (at 6.3 tCO2e) in 2020. 

Climate finance 

• Asian Development Bank (ADB) provides sustainability-linked financing: ADB and ABIS Exports India have entered into a sustainability-linked agreement to support construction of a micro fish feed plant, and train up to 6,000 farmers in climate-resilient fish farming practices. This is ADB’s first private sector sustainability-linked financing, with adjustments in pricing when pre-defined sustainability targets are met. Targets include emissions reductions, water conservation, and farmer training.  

• India’s first green bonds to fund climate finance projects: The Indian government has approved the framework for sovereign green bonds, in line with Budget 2022-23 announcement. The framework has been reviewed as ‘medium green’ (second-best level for a green bond). The issuance of green bonds will be to the tune of INR 16,000 crores for the ongoing financial year. Proceeds from the issuance will be used to fund certain kinds of public sector projects that will help in reducing carbon intensity of the economy. The finance ministry has constituted a Green Finance Working Committee (GFWC) chaired by chief economic advisor to assist in the selection and evaluation of projects under the framework. Reportedly, the government does not intend to put in place tax incentives to attract investors.  

• Banks look to build expertise on climate financing: Banks under the aegis of the Indian Banks’ Association (IBA) are planning to expand capacity to deal with credit requirements from ESG projects. This is being done by engaging experts from World Wildlife Fund, ADF, FICCI, SBI Caps etc. The goal is to sensitise smaller banks to boost sustainable financing in sectors like renewable energy, EVs, rooftop solar panels; and also, sensitise borrowers and other stakeholders. According to the report, larger banks like SBI, HDFC and Axis Bank already have ESG policies in place. Separately, at the annual banking conference ‘FIBAC 2022’ organised by FICCI and IBA, major Indian banks discussed how ESG principles could be embedded in the investment and financing processes for banks. 

• Finance ministry urges banks to incentivise MSMEs: The finance ministry has advised banks to support MSMEs that adopt sustainability standards for manufacturing with a range of incentives – such as cheaper credit. The report cites the following set of rationale for the move: a) to encourage MSMEs to adopt sustainable manufacturing practices, b) to improve credit flow to such entities, and c) India’s free trade agreement negotiations with UK and EU look to link market access with sustainable manufacturing. 

• CK Mishra-committee submits report on sustainable finance to the International Financial Services Authority (IFSCA): A committee led by CK Mishra, former Secretary of the Ministry of Environment, Forest and Climate Change, submitted its report to align IFSCA regulations with international best practices on sustainable finance. Some recommendations include exploring ways for capital flows in sustainable bonds, issuance of sovereign bonds, green bonds via IFSC, innovative sustainable finance products, voluntary carbon markets and promoting green fintech. 

Renewable energy 

• Piyush Goyal calls for growth of renewable energy sector:  Piyush Goyal, Union Minister for Commerce and Industry, called for the growth of the renewable energy sector in India to help India become energy-secure and as part of the push towards sustainability. He also noted that developing India’s renewable energy supply chain in will help it become self-reliant instead being dependent on others. At the same meeting, he also suggested using AI and IoT to train MSMEs to become quality suppliers of goods and services in the sector. 

• Kerala targets 2040 to become a 100% renewable-energy based state: Pinari Vijayan, Kerala chief minister has targeted for Kerala to become a 100% renewable energy-based state by 2040 and achieve net carbon neutrality by 2050. Kerala has taken several other initiatives in renewable energy- it is the first state in India to include hydrogen-powered mobility in its zero-emissions mobility policy; the state government has constituted the Kerala Hydrogen Economy Mission to work towards transforming it into a green hydrogen hub; the state government has also released the state action plan on climate change 2023-2020. The state government will soon come out with a new ESG-focused industrial policy to incentivise responsible industrial production.  

Green hydrogen 

• National green hydrogen mission: The Cabinet approved the National Green Hydrogen Mission to make India a hub for production, utilisation and export of green hydrogen and its derivatives. The initial outlay for the Mission will be Rs.19,744 crore. It aims to achieve by 2030 development of green hydrogen production capacity of at least 5 MMT (Million Metric Tonne) per annum with an associated renewable energy capacity addition of about 125 GW in the country. 

• India plans USD 2 billion incentive for green hydrogen industry: Reportedly, India is planning a USD 2 billion incentive programme for the green hydrogen and green ammonia industry. The programme seeks to reduce the production cost of green hydrogen by 1/5th over a period of 5 years. The current cost of green hydrogen in India is stated as INR 300 – 400 / kg.   

• India and France adopt joint roadmap on green hydrogen: India and France have adopted the ‘Indo-French roadmap on development of green hydrogen’. In a meeting on 4 May 2022, PM Modi and President Macron gave a mandate to their governments to establish bilateral cooperation on hydrogen, with the roadmap a result of that mandate. The elements of the roadmap include: establishing regulatory framework for a decarbonised hydrogen value chain, developing carbon-certification methods, fostering R&D to develop technologies for green hydrogen, support partnerships between French and Indian energy companies. 

Legislative developments 

• Parliament passes the Energy Conservation (amendment) bill: The parliament has passed the Energy Conservation (amendment) bill (Bill) that mandates the use of non-fossil fuel sources like green hydrogen, biomass and ethanol for energy and feedstock, and also establishes carbon markets in the country. Other features of the Bill include an energy conservation and sustainable building code for large buildings and energy consumption standards for vehicles and ships. The central government has stated that the passage of this legislation will boost India’s efforts in green energy, and help India meet its commitments to the 2015 Paris Agreement. 

Investment funds 

• Morphosis Venture Capital Limited to launch India-focused ESG fund: Morphosis Venture Capital Limited, an early-stage venture firm based in Dubai’s International Financial Centre, has launched its India-focused fund called ‘Alicorn’. With a corpus of USD 100 million, the fund is focused on early stage, business-to-business, ESG-positive tech-based startups with a significant Indian connection and Indian market opportunity, an international appeal with specific applicability to the Middle East. 

• C4D partners gets SEBI-nod to launch India-focused fund: C4D partners, a Netherlands-based impact investment firm, has received SEBI’s approval to launch its debut India fund of USD 50 million called ‘C4D Bharat Shubharambh Fund’. The fund will focus on startups with a high ESG focus, in sectors like financial inclusion, agri-processing, waste management and sectors that impact marginalised/ rural communities in India. It has also ear-marked 30% of its funds for startups that are women-owned and women-led. 

• Climate Innovation and Development Fund announces its first blended finance investments: Bloomberg Philanthropies and Goldman Sachs-backed, and Asian Development Bank-managed ‘Climate Innovation and Development Fund’ has announced its investment focussed on the sustainable transport sector in India and Vietnam. In India, the fund will support the purchase of 255 electric buses along with charging infrastructure to replace existing diesel buses operating on 56 high-traffic inter-city routes across cities like Delhi, Pune, states of Andhra Pradesh, Karnataka, Tamil Nadu and Telangana. This is expected to reduce around 15,000 tons of CO₂ emissions per year. 

Carbon Markets 

• Key stakeholders form industry association: Stakeholders with interest in the carbon market of India have come together to form the Carbon Market Association of India. Some members include Ayana Renewable Power, ACME Solar, Azure Power, and EKI Energy Services Ltd. The association plans to continue expanding its membership pool over the next few weeks. It will work as a mediator between industry and government on policy matters as the government seeks to become net-zero through climate positive initiatives. The association has been formed following the introduction of the Energy Conservation (Amendment) Bill, 2022, which proposes to empower the central government to specify a carbon trading scheme. 

• IEX to launch India’s first carbon exchange: The Indian Energy Exchange (IEX), India’s largest power exchange, is looking to set up India’s first carbon exchange. 

States 

• Maharashtra to soon have policy on circular economy parks: Maharashtra will soon have a circular economy park policy for proposed four circular economy parks in the state. The parks, aimed at maximising recycling and and protecting natural resources, will be set up in Konkan, Vidarbha, Mumbai, and Pune. The Material Recycling Association of India was announced as the knowledge partner of the policy.    

• AP government focuses on ‘climate change governance cell’: The government of Andhra Pradesh has created a climate change cell (CCC) in its environment, forests, science and technology department. The CCC has been tasked with formulating and implementing the state action plan on climate change, and build capacities and address issues through an ecosystem-based approach. The CCC will coordinate with the AP Pollution Control Board to prepare the state action plan on climate change. Other tasks of the CCC include liaising with central government, funding agencies, monitoring and implementation of programmes like green climate fund and integrated coastal zone management project. 

Miscellaneous 

• NITI Aayog releases report on ‘Carbon Capture, Utilisation, and Storage (CCUS) policy framework and its deployment mechanism in India’: The NITI Aayog’s report explores the importance of CCUS as an emission reduction strategy to achieve deep decarbonization from hard-to-abate sectors. The report outlines the policy interventions needed across various sectors for its application. It also states that CCUS can provide a wide variety of opportunities to convert captured CO2 to different products like green urea, building materials, chemicals and enhance oil recovery. The report notes that CCUS projects can lead to significant employment generation – 750 million tonnes per annum of carbon capture by 2050 can create employment opportunities for 8 to 10 million people, in a phased manner. 

• CCI sees competition law as fit to assess sustainability and climate action: Speaking at an event organised by the Consumer Unity and Trust Society, Jyoti Bhanot, secretary, CCI, said that climate change, sustainability, and environmental-friendliness can be qualitative factors in competition assessment. She added that both innovation and competition should be supplemented with sustainable development. She noted that businesses are developing environmentally-conscious technologies, and competition can play a key role in tackling climate change. Specifically, she said that if consumers are willing to pay for sustainable outcomes, it will encourage businesses to build greener products and solutions.  

• SEBI to undertake several steps on ESG: SEBI’s chairperson Madhabi Buch, in a speech at a national conference on ESG for Atmanirbhar Bharat, said that emerging markets like India need to have an independent view on ESG matters, and that she favours India having its own market for carbon credits instead of a single global market. SEBI is also expected to soon issue a framework for ESG rating providers – third party agencies that help determine ESG compliance of listed companies. She also said that SEBI will accommodate Indian companies’ need to comply with international standards on ESG, which is important to attract global funds. 

• Centre provides update on MSME sustainable certification scheme: The central government had launched the MSME sustainable certification scheme in April 2022- to encourage MSMEs to improve manufacturing processes and systems to enhance quality and move towards sustainability. Under the scheme, the registered MSMEs get subsidies and other incentives. So far, more than 22,000 enterprises have been registered under the scheme. 

• India’s VCs and startups adopt ACT-BCG’s Green Startup Pledge: ACT, a leading non-profit venture, along with the Boston Consulting Group launched the Green Startup Pledge (GSP) at COP27. This pledge seeks to encourage startups to transition towards incorporating sustainability into their businesses by supporting startups in scaling sustainable practices. The GSP is the world’s first climate pledge mainly for startups, and is backed by India’s leading startups like Zerodha, Zomato and Ola. The GSP is aligned with the goal of ‘net zero by 2050’. 

• Launch of India’s first ever climate-edtech: ‘EKI Energy Services Limited’ has partnered with ‘First Source Energy India Pvt. Ltd.’ to form a joint-venture called ‘ClimaCool Projects and EduTech Ltd.’, India’s first climate edtech, and climate finance marketplace. The venture may offer a range of educational initiatives on subjects like carbon markets, carbon accounting, carbon credits and ESG, to develop a talent pool for India’s climate change industry. Simultaneously, it will mobilise funds to invest in sustainability and renewable energy projects globally. 

• India and Sweden announce the ‘Green Transition Partnership’: India and Sweden announced the launch of a collaborative partnership called the ‘India-Sweden Green Transition Partnership’ on 23 November 2022. Through this partnership, 6 Swedish companies will join hands with Indian companies across cement, iron and steel and automotive sectors to help them on their initiatives in sustainability, green transition and innovation. To facilitate this partnership, a ‘Sustainability by Sweden’ ecosystem has been established in India. 

• India-Australia sign free trade agreement: India and Australia have signed the free trade agreement titled ‘Economic Cooperation and Trade Agreement’ (ECTA). The ECTA will facilitate the sharing of low emissions technological resources, and critical minerals between the two countries that are part of their efforts to transition towards net-zero emissions. 

• India can cut emissions from its buildings to half by 2050 to meet net-zero target: The National Institute of Urban Affairs and the Rocky Mountain Institute have released a report titled ‘From the Ground Up’ that provides a whole-system based approach to reduce emissions from India’s buildings. While emissions from buildings are estimated to multiply four times by 2050, the report suggests that by implementing its approach – emissions intensity can be reduced by 75% by 2050.  

• Amitabh Kant states there is a need to promote circular economy to combat climate change: Amitabh Kant, India’s sherpa to the G-20, said that a forthcoming meeting of state chief secretaries will discuss ways to promote and implement a circular economy. He cited the examples of Rajasthan and Goa as states taking initiatives in this regard in sectors like electronic waste. He also stated that FICCI was working with NITI Aayog, the EU and industry to develop a unified national circularity measurement framework for benchmarking and reporting.  

• Apparel Export Promotion Council (AEPC) launches Apparel Industry Sustainability Action (AISA):) The AEPC, which is the official body of apparel exporters in India, has launched the Apparel Industry Sustainability Action to boost sustainability in the garment industry. Aims of the initiative include promoting sustainable measures amongst MSMEs, providing support to MSMEs, and contributing to policy measures to promote greater adoption of sustainability measures.  

• SAP Labs India has launched two software products to boost sustainability amongst enterprises: SAP Labs India, the Indian subsidiary of multinational software company SAP, has launched two software products called ‘Product Footprint Management’ (PFM) and SAP Sustainability Control Tower for businesses.  

• Ministry of tourism organizes ‘CEO roundtable on sustainable tourism’: The ministry of tourism along with the United Nations Environment Program (UNEP) and Responsible Tourism Society of India (RTSOT) organised a ‘CEO round-table on sustainable tourism’ on 25 November 2022. The round-table was organised with the aim of enhancing awareness of industry members on sustainable tourism and to share and promote best practices. The participants also signed up to implement initiatives to accelerate sustainable consumption and production and transform the tourism sector into a including low-carbon, climate resilient and green economic industry. 

• Google for startups accelerator: circular economy: The ‘Google for startups accelerator’ has been launched as a 10-week virtual accelerator for seed-to-series A technology startups. It will provide mentorship, training, and support from Google to help tackle challenges related to the waste economy. 

• India Inc majors to be net-zero by 2050: Major Indian corporate houses, including Vedanta, JSW Group, Aditya Birla Group, and Adani, have set decarbonisation targets, including being new-zero by 2050 or earlier.  Nearly 100 companies have disclosed information for FY 2022 under the SEBI’s ‘Business Responsibility and Sustainability Reporting Standards’. SEBI has made these standards mandatory for top-1000 Indian companies from FY 2023. 

• India-US hold dialogue on clean energy partnership on October 7: The India-US strategic clean energy partnership dialogue was launched. The dialogue is a part of the India-US Climate and Clean Energy Agenda 2030 in April 2021. This partnership seeks to scale up emerging clean energy technologies and deploy technical solution as part of 5 pillars: responsible oil and gas, power and energy efficiency, sustainable growth and emerging fuels and technologies.   

• India to attract USD 10 billion in green energy investment in 2023: Kaku Nakhate, president and India country head of Bank of America, stated that India could attract nearly USD 10 billion in renewable energy investment in 2023. Areas of investment include electric vehicles and green hydrogen, as investors look to ensure that energy transition is reflected in their investment portfolios. 

• Centre shares 75-point climate friendly practices under Mission LiFE: The central government has published a list of 75 lifestyle practices that can be adopted as climate-friendly behaviour under Mission LiFE (Lifestyle for Environment). These lifestyle practices are spread across seven categories – energy, water saving, single-use plastic, sustainable food, waste reduction, healthy lifestyle, and e-waste. PM Modi and UN Secretary-General Guterres had formally launched Mission LiFE earlier in the month. The mission is also part of India’s updated list of nationally determined contributions submitted to the UN Framework Convention for Climate Change (UNFCCC). Mission LiFE is also expected to be part of India’s leadership agenda when it assumes presidency of G-20 in December 2022. 

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