A new survey reports that nearly 90 percent of Indian companies have embraced sustainability strategies, pointing to their growing commitment to adopt environmentally friendly technologies, processes and practices
According to a recent study conducted by the World Economic Forum, the Confederation of Indian Industry, and IORA Ecological Solutions, 89 percent of the largest Indian companies have a sustainability strategy.
Additionally, almost half of these companies have a net-zero strategy in place. When asked about the business case, the companies showed particular interest in the role of nature-based solutions in carbon sequestration. These solutions can help contribute to corporate net-zero goals, improve brand image, and increase business resilience.
Moreover, over 90 percent of survey respondents plan to significantly or moderately increase their NCS investments over the next five years. And 54 percent of respondents mention they plan to start or grow their purchase of forest carbon credits in the next five years, compared to 7 percent currently purchasing such credits.
Four areas emerged that represent barriers to investment, which respondents cited as factors that would influence their decisions to scale their NCS investments:
1. Clarity on regulatory frameworks: Clarity on nature-related regulatory frameworks that enable NCS investments, including the Green Credit Programme and the compliance and voluntary carbon markets, where companies need more information regarding the issuance, ownership, and international transfer of carbon credits.
2. Land ownership complexities: procedural support in navigating the complexities of land ownership and opportunities for trusted and functional multi-stakeholder partnerships, including with state governments, is needed.
3. High-quality NCS projects: The availability of high-quality projects with clear environmental and social outcomes with strong monitoring, reporting, and verification (MRV) frameworks is crucial.
4. Sector-specific business case: A stronger business case adapted to each industry sector would help address concerns about uncertain returns on investment, high upfront costs, and alignment between the horizon of NCS projects and short-term financial priorities.
Corporate interest in natural climate solutions (NCS) is increasing as $44 trillion of the global economy faces high or moderate risk from natural loss. NCS are a crucial strategy for negotiating the crisis precipitated by climate change and biodiversity loss and strengthening the resilience of the world's socio-economic systems.
NCS involves various actions aimed at safeguarding, conserving, restoring, and sustainably managing terrestrial, freshwater, coastal, and marine ecosystems while providing livelihood benefits. NCS could deliver up to one-third of the net emission reductions required by 2030.
India faces high stakes due to climate-related risks that potentially cost the nation 3 percent of its GDP annually. Additionally, approximately 30 percent of the land in the country is degraded, which has significant consequences for agri-rural livelihoods.
To address these challenges, India has made commitments under its NDC to the Paris Agreement and the UNCCD. The commitments include expanding forest and tree cover to create an additional sink of around 3 billion tonnes of CO2 and restoring 26 million hectares of degraded land.
Current investments in NCS in India are primarily public-sector-driven and fall short of what is required. The total funding gap is substantial, with an estimated $161.9 billion needed by 2030 in the forestry sector alone.
Yet the survey showed that significant barriers must be overcome to unlock the full potential of corporate investment in NCS. Most companies (62 percent) reported that their investments currently come from Corporate Social Responsibility (CSR) budgets, and the majority are pretty small (under $1 million).
A further 35 percent of corporates surveyed indicated that they invest in NCS to meet national or global mandatory regulatory requirements. This suggests that while companies recognise the potential business case linked to their core sustainability strategies and business resilience, this has yet to translate into investment decisions.
Four areas emerged that represent barriers to investment but that respondents cited as factors that would influence their decisions to scale their NCS investments:
5. Clarity on regulatory frameworks: Clarity on nature-related regulatory frameworks that enable NCS investments, including the Green Credit Programme and the compliance and voluntary carbon markets, where companies need more information regarding the issuance, ownership, and international transfer of carbon credits.
6. Land ownership complexities: Procedural support in navigating the complexities of land ownership and opportunities for trusted and functional multi-stakeholder partnerships, including with state governments, is needed.
7. High-quality NCS projects: The availability of high-quality projects with clear environmental and social outcomes with strong monitoring, reporting, and verification (MRV) frameworks is crucial.
8. Sector-specific business case: A stronger business case adapted to each industry sector would help address concerns about uncertain returns on investment, high upfront costs, and alignment between the horizon of NCS projects and short-term financial priorities.