Exploring the role of Green Externalities Accounting in ensuring a sustainable Present and Future

Quantifying the Unseen: Assessing the Economic Impact of Hidden Green Externalities

by with No Comment EducationSustainabilitySustainability Reporting

Exploring the role of Green Externalities Accounting in ensuring a sustainable Present and Future

Abstract

Accounting, as a critical language of finance, plays a pivotal role in shaping modern economies. This research article delves into the multifaceted accounting world, specifically focusing on Green Externalities Accounting in India. It explores the impact of green accounting toolkits and standards on economic development, state relations, and businesses. The article concludes with a call to action for a more sustainable future.

Introduction to Green Externalities

Anthropogenic climate change poses a significant threat, capable of engulfing us in one fell swoop, and its impacts extend far beyond a sudden wipeout. The cumulative acts of degradation have prompted various organisations to develop action plans and indices, such as the Climate Risk Index [1] aimed at addressing the threats of climate change. As determining forces, how can human-run organisations position themselves within the shell of nature’s resources and contribute to a more sustainable narrative?

While there is plenty we can do to keep our activities in check, accounting remains at the forefront in offering a structured process of recording, summarising, and analysing financial transactions among and across leading organisations, businesses, and states. It provides stakeholders with essential information to make informed decisions, influencing business strategies and socio-economic landscapes. Highlighting the pivotal role of finance in climate policy, Article 2 of the Paris Agreement emphasises the necessity of aligning financial flows with a trajectory aimed at reducing greenhouse gas emissions and enhancing resilience to climate change.

India’s adoption of International Financial Reporting Standards (IFRS) was initially announced by the Securities and Exchange Board of India (SEBI) in 2010. The convergence and adoption, however, were optimal and only applied to a few companies voluntarily. [2] Although limited, we can not discount the role that accounting standards such as the IFRS and the like play in determining GDP standards and broader economic analysis; much of which has come to stand synonymous with progress and development. Amidst the towering skyscrapers and bustling city streets, the relentless pursuit of economic growth often takes centre stage. However, as we marvel at the soaring GDP figures, it’s time to ask a pivotal question: Does GDP capture the true growth of the nation? A World Bank report from a few years ago revealed that India incurred a staggering cost of $550 billion, equivalent to approximately 8.5% of its GDP, as a consequence of air pollution alone. Furthermore, the expenses related to external factors like water pollution and land degradation were potentially even more substantial. India’s practice of exporting commodities effectively results in the depletion of its natural resources, which in turn escalates the risk of desertification and significant land degradation. If these alarming trends persist, it is plausible that India’s food production could experience a decline of 10-40% within a century. Therefore, when celebrating GDP growth, it is imperative that we also take into account the depletion of our nation’s natural capital in our economic assessments. [3]

Taking into account green externalities aims to quantify the environmental impacts of economic activities, such as pollution or resource depletion, makes them visible in economic assessments. It considers factors including but not limited to greenhouse gas emissions, water usage, and land degradation. In the pursuit of development through multidisciplinary approaches encompassing socio-economic concerns and environmental sustainability, it becomes imperative to ensure enduring progress for the future. This is particularly relevant for developing economies like India, where a shift from agriculture to manufacturing and services sectors is underway. The inadequacy of the traditional System of National Accounts (SNA), which measures Gross Domestic Product (GDP) and Gross National Product (GNP), lies in its inability to capture the true essence of a nation’s wealth, income, and performance. It fails to account for the environmental impact via externalities, be it positive or negative. Additionally, the conventional SNA disregards the value of natural resources that remain untransformed into marketable goods or services. The concept of ecosystem services, which denotes the environment’s free services to humanity, remains absent from current national accounting methods. These services, often termed as the ‘GDP of the poor,’ are especially critical for impoverished communities. The absence of ecosystem services in national accounting overlooks their significant contribution. The evolution of Green Externalities accounting has gained substantial urgency in recent years due to the significant losses nations have suffered from neglecting this crucial aspect of economic analysis. Severity has unearthed consequences including habitat destruction, resource depletion, and climate change. These issues have led to ecological crises, natural disasters, and adverse health effects, all of which have imposed substantial economic costs.

As per the United Nations Environment Programme Report, 1997 [4], greening the GDP is one of our major pathways towards a Green Economy. The integration of Green Accounts into traditional accounting systems will not only enable policymakers to analyse the interconnections between a nation’s economic activities and its environmental costs but also quantify these costs at various stages of production processes. This will empower relevant agencies to access precise data for amending industrial practices that surpass established environmental limits. Beyond accounting and assessment, parameters associated with Green Accounting provide a more accurate representation of economic growth by considering environmental costs and holding businesses accountable for their environmental footprint. Finally, it enables governments to tailor policies for regional variations in environmental impact, promoting balanced development.

Tools for Green Externalities Accounting

Creating an effective toolkit for Green Externalities Accounting involves defining clear metrics, establishing data collection protocols, and developing standardised reporting guidelines. It requires encompassing both qualitative and quantitative data to assess environmental impacts comprehensively. To facilitate the development of Environmental Accounts, key international organisations, including the United Nations, European Commission, International Monetary Fund, Organisation for Economic Cooperation and Development, and the World Bank, jointly issued the System of Environmental and Economic Accounts (SEEA-2003) handbook in 2003. Two primary approaches to Green Accounting have been proposed: one involves creating separate ‘satellite’ accounts dedicated to valuing natural resources, while the other advocates for a comprehensive modification of the traditional SNA to fully incorporate environmental accounts. In India, the Green Indian States Trust (GIST) took a significant step by creating environmentally adjusted accounts in 2003 under the Green Accounting for Indian States Project. Nevertheless, Green Accounting in India is in its infancy. The former Minister of Environment and Forests, Government of India, Mr. Jairam Ramesh, advocated for a transition towards incorporating environmental factors into national accounts by 2015. The TEEB India (The Economics of Ecosystem and Biodiversity) Project, initiated in 2011, conducted some standalone studies in this regard but hasn’t sufficiently contributed to the development of a Green GDP due to a fragmented approach.

Among the list of prominent reporting and decision-making tools that businesses and organisations are adopting, this article briefly discusses four of the following: Environmental Impact Assessment (EIA), Life Cycle Assessment (LCA), Carbon Pricing, and Sustainability and ESG Reports.

Environmental Impact Assessment (EIA) happens to be one of the many successful policy innovations of the 20th Century for environmental conservation. In India, it took off in the late 1970s and was first ordered during the early 1980s, on the Silent River Valley hydroelectric project. Since its induction in countries undergoing rapid industrialisation and economic growth-such as India- EIA has served as a vital toolkit in helping entities account for the environmental impact of their operations and decision-making and ensure that progress is aligned with environmental protection.

As for its contemporary, the Life Cycle Assessment (LCA). LCA helps pinpoint environmental “hotspots” and offers insights into reducing the substantial energy and material inputs, emissions, and waste, influencing decision-making at various project stages for improved environmental performance. [5] Energy audits generally encompass a thorough examination of an entity’s energy consumption patterns, encompassing the operation of energy-demanding equipment like HVAC systems, lighting, and industrial machinery. Organisations commonly utilise Life Cycle Assessment (LCA) to pinpoint instances of energy inefficiency and devise conservation-focused approaches. [6] However, LCAs demand a substantial amount of data since they require the inclusion of all inputs and outputs related to the environment across every step of supply chains and throughout the entire life cycle of a product or service. Therefore, the establishment of a comprehensive national LCA database is essential for advancing more comprehensive and scientifically grounded approaches to address sustainability challenges at the national level.

Carbon pricing is a policy mechanism aimed at reducing greenhouse gas emissions by assigning a cost to carbon emissions. It can be implemented through carbon taxes or cap-and-trade systems. Carbon taxes impose a direct fee on carbon emissions, while cap-and-trade systems set a cap on emissions and allow trading of emission permits. The idea is to incentivize companies and individuals to reduce their carbon emissions by making it financially advantageous to do so. This mechanism is crucial in mitigating climate change and transitioning to a low-carbon economy. However, currently, India does not levy an explicit carbon price. In 2021, fuel excise taxes, functioning as an indirect method of carbon pricing, accounted for 54.7% of greenhouse gas (GHG) emissions, maintaining the same level as in 2018. Conversely, fossil fuel subsidies, which remained at 2.5% of GHG emissions in 2021 as they were in 2018, worked in opposition to the advancements made in reducing emissions.”[7]

ESG sustainability reports are documents produced by companies and organisations to communicate their performance and commitment to environmental, social, and governance factors. ESG factors cover a wide range of issues, including environmental impact, and social ESG reporting is essential for transparency, accountability, and assessing a company’s sustainability and ethical practices. It is increasingly important in today’s business world as investors and consumers prioritise socially responsible and sustainable investments and products.

Obstacles and Requisites for Incorporating Green Externalities in India

India is currently positioned as the fifth most susceptible country to the repercussions of climate change, potentially endangering 2.5% to 4.5% of its GDP annually. To address this vulnerability, India has committed to reducing the carbon intensity of its GDP by 33-35% by 2030 compared to its 2005 levels. Nevertheless, achieving this ambitious target requires a substantial investment of $2.5 trillion between 2016 and 2030, as highlighted in a report by the Ministry of Environment, Forest and Climate Change (MoEFCC) in 2015.

Despite the urgency of the situation, there remains a significant shortfall in climate-related investments, stemming from both public and private sources. A forthcoming study conducted by the Climate Policy Initiative (CPI) indicates that India is currently mobilising less than a quarter of the necessary investment to meet this crucial target, as reported in 2020. [8] This includes regulatory changes, data infrastructure enhancement, and capacity building for businesses and government agencies. A robust framework for valuing environmental externalities is crucial for accurate accounting. Stakeholders in this transition include governments, businesses, environmental organisations, and accounting bodies. Governmental responsibility entails enacting policies to incentivise green practices. Businesses need to invest in sustainability initiatives and report their environmental impacts accurately. Environmental organisations can provide expertise and advocacy while accounting bodies must adapt standards to include green externalities. However, the process of such assessment in India faces several deficiencies which include but are not limited to its exclusive application to project-specific issues, and its focus on data presentation over analysis.

To enhance the process, accounting and assessment must aim to encompass private sector projects influenced by economic policy changes. Specific criteria for evaluating environmental impacts must be tailored to each project and its local environmental conditions. Furthermore, public participation, beginning early in project development is crucial, necessitating informal channels and financial support for affected communities. Associated departments must meticulously review projects, recording decisions publicly along with post-project monitoring. In India, the potential exists to implement these improvements with existing scientific resources. [9]

In-store

The research article has attempted to delve into the crucial importance of implementing Green Externalities Accounting, highlighting its pivotal role in reshaping modern economies towards sustainability. It underscores stakeholders’ need to prioritise transparency throughout their operations and be held responsible for the repercussions thereof. Often, minor externalities represent a significant grey area where communities are enduring global environmental impacts that are often overlooked or insufficiently quantified, even when occurring in plain sight. Until we take responsibility for our actions and incorporate them into our accounting practices, we cannot effectively assess or mitigate the consequences these actions have on communities, whether they are directly or indirectly connected to us. Beyond accounting, there will arise a need to assess climate-induced fiscal risks, and changes in the structure of the economy. Now is the moment for action. Connect with Carbon Mandal today to lead your organisation into this essential accounting revolution. Take a bold step with us now to shape a future that’s truly sustainable.

List of References

  1. 20-2-01E global climate risk index 2020 – Germanwatch. (n.d.). https://www.germanwatch.org/sites/germanwatch.org/files/20-2-01e%20Global%20Climate%20Risk%20Index%202020_14.pdf
  2. Adoption of IFRS in India: Benefits, challenges, and measures. (n.d.-b). https://www.ijsi.in/wp-content/uploads/2020/12/18.02.012.20190402.pdf
  3. Gandhi, F.V. (2018, May 23). Natural capital in the 21st century. The Hindu
    https://www.thehindu.com/opinion/op-ed/natural-capital-in-the-21st-century/article23971804.ece
  4. UNEP. Governing Council (19th sess.: 1997: Nairobi). (1997). United Nations Environment Programme:: report of the Governing Council on the work of its 19th session, 27 January- 7 February 1997, 3-4 April 1997. United Nations Digital Library System. 
    https://digitallibrary.un.org/record/243368?ln=en
  5. Muralikrishna, I.V., & Manickam, V.(2017). Life cycle assessment. In Elsevier eBooks (pp. 57-75). https://doi.org/10.1016/b978-0-12-811989-1.00005-1
  6. Rahman, Md. M., & Islam, M.E. (2023). The Impact of Green Accounting on Environmental Performance: Mediating Effects of Energy Efficiency.
    https://doi.org/10.21203/rs.3.rs-2604713/v1
  7. Pricing greenhouse gas emissions: Turning climate targets into … – OECD. (n.d.-d).
    https://www.oecd.org/tax/tax-policy/pricing-greenhouse-gas-emissions-turning-climate-targets-into-climate-action.htm
  8. Department for Energy Security and Net Zero. (2019, July 2). Accelerating green finance: Green Finance Taskforce Report. GOV.UK.
    https://www.gov.uk/government/publications/accelerating-green-finance-green-finance-taskforce-report
  9. Evaluation of the environmental impact assessment procedure in India. (n.d.-c). https://www.tandfonline.com/doi/pdf/10.1080/07349165.1994.9725851
Representation of Indian Carbon Market

India’s Carbon Market: A Promising Future for Climate Action?

by with No Comment Carbon CreditsSustainability

Taking a look at the carbon market in India and its expected future

Climate change is undeniably one of the biggest threats we face today, and combating it requires innovative solutions. Enter the carbon market – an intriguing concept that has gained momentum worldwide. The carbon market is a system where businesses and governments buy and sell credits for emitting greenhouse gases. The market sets a price for carbon, which creates an incentive to reduce emissions.

Carbon markets can either be compliant or voluntary. Compliance markets are formally governed by laws at the national, regional, and/or worldwide levels. Today’s compliance markets primarily follow a concept known as “cap-and-trade” [6]. Whereas, in voluntary carbon markets emitters like businesses, people, and others purchase carbon credits to compensate for the release of one tonne of CO2 or similar greenhouse gases. These carbon credits are produced through actions that remove CO2 from the atmosphere, like reforestation [6].

International carbon markets can be crucial in achieving cost-effective global greenhouse gas emission reductions. The number of emissions trading systems is rising globally. The United States, Canada, China, Japan, New Zealand, South Korea, and the EU ETS are just a few of the countries that have national or subnational systems running or in the works [4]. The market for carbon rose 13.5% in 2022, reaching a new high of 865 billion euros. This expansion was primarily brought on by an uptick in the demand for carbon permits, which resulted in skyrocketing costs [2]. Based on revenue, the European Union Emission Trading System is the largest carbon market; in 2022, it represented over 87% of the total market size.

In India, with its booming economy and increasing greenhouse gas emissions, how would the carbon market play a role in combating climate change? In this blog, we delve into the potential of India’s carbon market, exploring its promises and future in order to meet the sustainable goals of India.

India’s Carbon Market – Carbon Credit Trading Scheme

The carbon market in India is still in its early stages of development, but it holds great promise for climate action. The market allows businesses and individuals to offset their emissions by investing in projects that reduce greenhouse gas emissions. In return, they receive carbon credits that can be used to offset their own emissions or traded on the open market. India has issued 35.94 million carbon credits between 2010 and 2022 and has also traded these credits on overseas markets [5].

The Government of India has been taking steps to establish a carbon market in the country.

The most recent update was, in 2023, when the union government sanctioned the establishment of the first domestically regulated carbon market in India [1]. The goal of the Indian government’s development of the Indian Carbon Market (ICM), which would establish a national framework, is to decarbonize the Indian economy by pricing Greenhouse Gas (GHG) emissions through the trade of Carbon Credit Certificates [3]. The Carbon Credit Trading Scheme is being developed for this purpose by the Ministry of Power’s Bureau of Energy Efficiency in collaboration with the Ministry of Environment, Forestry, and Climate Change. The plan calls for the establishment of a “National Steering Committee,” a technical committee, an accredited carbon verification agency, and the Central Electricity Regulatory Commission (CERC), which will act as the market regulator for carbon emissions [1]. By 2025 it is anticipated that  Renewable Energy Certificates (REC) and Energy Savings Certificates (ESC) will be traded, and by 2026 these will be changed to Carbon Credit Certificates.

Through the creation of a domestic registry and integration with power markets, the recently announced carbon credit trading plan would usher in a new era to restore the trading of emissions, CMAI (Carbon Market Association Of India) President Manish Dabkara, Chairman and MD of EKI Energy Services, states that “Taking a cue from its Paris Agreement commitment and chasing its NetZero goal, Government of India in consultation with the Bureau has released the Carbon Credit Trading Scheme (CCTS) for the institutionalisation and functioning of the Indian Carbon Market (ICM). It involves a process for compliance in which emission objectives will be established for specific industries and organisations, surpassing which they will receive credit certificates” [7].

The energy transformation initiatives will be strengthened by the new avatar Carbon Credit Trading Scheme, which will broaden their scope to include India’s potential energy sectors. In order to meet the climate goals, GHG intensity benchmarks and targets will be created for these sectors and will be in line with India’s emissions trajectory [3]. Based on how well these sectoral trajectories are doing, carbon credits will be traded. Additionally, it is anticipated that a voluntary system will be developed concurrently to stimulate GHG reduction from non-obligated industries. Through the purchase of emission credits by both public and private enterprises, the ICM will activate new mitigation alternatives.

However, the notification did not list the activities that would qualify under the carbon trading plan. “The Ministry of Power will advise notifying the Ministry of Environment, Forestry and Climate Change (MoEFCC) of greenhouse gas emission intensity targets. The accountable parties are required to reach the targets for greenhouse gas emission intensity. The announcement stated that the obligated companies “shall also be required to get any other targets, such as usage of non-fossil energy or specific energy consumption, as may be declared by the Ministry of Power under the Act as amended from time to time [1].

The Future of the Carbon Market in India

Industry insiders predicted that the $2 billion voluntary carbon credit market in India may grow to $200 billion by 2030 [1]. India is one of the biggest exporters of carbon credits, yet it lacks its own carbon market. Although there are a few carbon offsetting sites that offer carbon credits, there isn’t yet a market that is regulated [1].

In the past decade, there have been many carbon market initiatives launched in India. It is difficult to predict the future of any given market, and this is especially true for nascent markets like carbon. There are a number of factors that could affect the future development of the carbon market in India, including political stability and economic growth.

Political stability is an essential factor to consider when predicting the future of any market. Political turmoils will make it difficult for businesses to operate and thus create uncertainty about the policy environment. Such situations could hamper the development of the carbon market in India.

Economic growth is another important factor to consider when predicting the future of a market. A growing economy usually leads to increased demand for commodities, including carbon credits. With India’s growing economy and a larger number of businesses coming up, the demand for carbon credits could potentially increase.

India’s transition to a low-carbon economy

The benefits of having a carbon market in India are many. For one, it would create incentives for businesses to invest in green technologies and practices that lower their emissions. It would give Indian businesses a way to offset their emissions if they are unable to reduce them enough on their own. There will be challenges that India could face when it comes to the regulation of this carbon market and tackling these issues would take solid and structured guidelines.

A carbon market would send a strong signal to the international community that India is serious about tackling climate change. This could attract more foreign investment and help India transition to a low-carbon economy.

References

  1. Standard, B. (2023). Centre approves formation of India’s first domestic regulated carbon market. https://www.business-standard.com/economy/news/centre-approves-formation-of-india-s-first-domestic-regulated-carbon-market-123063000813_1.html. Accessed July 10th 2023
  2. Ian Tiseo, & 10, J. (2023, July 10). Global Carbon Market Size 2022. Statista. https://www.statista.com/statistics/1334848/global-carbon-market-size-value/#:~:text=The%20value%20of%20the%20global,which%20culminated%20in%20surging%20prices. Accessed July 14th 2023
  3. Ministry of Power & Ministry of Environment, forests & climate change to develop Carbon Credit Trading Scheme for decarbonisation. Press Information Bureau. https://pib.gov.in/PressReleasePage.aspx?PRID=1923458. Accessed July 10th 2023
  4. International Carbon Market. Climate Action. https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/international-carbon-market_en. Accessed July 14th 2023
  5. www.ETEnergyworld.com. (2023, March 28). Carbon credit: Understanding the concept, its evolution and implications – ET energyworld. ETEnergyworld.com. https://energy.economictimes.indiatimes.com/news/renewable/carbon-credit-understanding-the-concept-its-evolution-and-implications/99064759. Accessed July 14th 2023
  6. Munjal, D. (2023, January 26). Explained: What are carbon markets and how do they operate? https://www.thehindu.com/news/national/explained-what-are-carbon-markets-and-how-do-they-operate/article66260084.ece. Accessed July 14th 2023
  7. Business Today. (2023, July 3). Govt finalises scheme for Indian Carbon Market, Steering Committee to be formed. https://www.businesstoday.in/latest/economy/story/govt-finalises-scheme-for-indian-carbon-market-steering-committee-to-be-formed-388004-2023-07-03. Accessed July 16th 2023
Exploring the Connection Between Gender Diversity and ESG Performance

Representation of Women in Indian Corporate Leadership: A Recipe for sustainable business?

by with No Comment Gender EqualitySustainability

Exploring the Connection Between Gender Diversity and ESG Performance

In recent years, gender diversity has emerged as a crucial aspect of sustainable development. Many countries have recognized the importance of gender diversity in corporate governance and have started promoting it through various policies and initiatives. The impact of gender diversity on sustainability reporting has also been a topic of interest for researchers and policymakers. Sustainability reporting is crucial for companies to communicate their environmental, social, and governance (ESG) performance to stakeholders.

Women bring significant talent, experience, and educational background to business leaders today. Despite this, they are underrepresented in higher leadership roles. Organisations typically compete vigorously to recruit and promote these candidates. However, whether we’re talking about countries, Fortune 500 companies, governments, healthcare, or other service industries, there’s clear evidence of a natural and persistent gap between the apparent qualifications and the presence of women in top-level management. [1]

The higher the percentage of women on a business’s board of directors, the more likely the company would appear on lists of the most admired firms, the most ethical companies, the best companies to work for, and the best corporate citizens. Gender is continuously one of the driving variables of a firm’s corporate social responsibility (CSR) performance. [2]

Hillman et al. (2000), interpreted the resource-dependent approach as stating that the company will profit from the diversity of gender, age structure, experience, and professional background of the management. Thus, increased monitoring efficiency can be justified, among other things, by improved information processing and a desire to engage in discourse on the supervisory committee. This could lead to more precision in sustainability reporting. [3]

Breaking the Glass Ceiling: Examining the Representation of Women in Top-Level Management in Indian Companies

The representation of women in top-level management in Indian companies is low. A study by management consulting firm Zinnov, in collaboration with Intel India, found that only 11% of senior leaders in Indian companies are women, compared with 20% in mid-level roles and 38% in junior roles. The study also found that women are more likely to be found in non-technical roles than in technical roles.[4]

Several factors contribute to the low representation of women in top-level management in India. One factor is the lack of women in the workforce. According to the World Bank, only 24% of women in India participate in the labour force, compared to 79% of men. This is due to several factors, including social norms that discourage women from working outside the home, lack of childcare facilities, and discrimination in the workplace.[5]

Another factor that contributes to the low representation of women in top-level management is the lack of women role models. There are very few women who hold top-level positions in Indian companies, and this can make it difficult for young women to see themselves in these roles. [5]

Improving the representation of women in top-level management is important for several reasons including to help create a more just and equitable society.

The Impact of Gender Diversity on Sustainability Performance: A Closer Look at Indian Companies

A number of theories provide the theoretical justification for the association between the presence of female directors and sustainability, despite the fact that women’s directorship in Indian corporations is a relatively new phenomenon that can be traced to the mandating of specific sections in the Companies Act (2013). According to the widely accepted and advanced stakeholder and resource dependence theory, gender diversity on a company’s board of directors may put pressure on an organisation to adopt various environmentally friendly and sustainable business practices in order to satisfy the demands and expectations of its shareholders. The environmental, social, and general sustainability issues of the firm are seen favourably by the women directors. The characteristics that these women directors bring to the board, such as emotionality and empathy, as well as their expertise and competence, provide a feministic transformational approach to the board’s decision-making. The women on the board advocate for investments in socially responsible activities as well as other long-term sustainability projects. [6]

Research has consistently shown that gender diversity in the workplace leads to better decision-making, improved innovation, increased profitability, and enhanced social and environmental responsibility. By incorporating gender diversity into their sustainability reporting practices, firms can showcase their commitment to creating a more inclusive and equitable workplace and ultimately contribute to a more sustainable future. It is therefore essential for firms to prioritize gender diversity and inclusivity as core components of their sustainability reporting, not only for the sake of their employees but also for the benefit of their stakeholders, shareholders, and the wider community. The evidence is clear: when firms embrace gender diversity, they create a more sustainable, equitable, and prosperous future for all.

List of references

[1] Nanton, C. R. (2015). Shaping Leadership Culture to Sustain Future Generations of Women Leaders. Journal of Leadership, Accountability & Ethics, 12(3).

http://m.www.na-businesspress.com/JLAE/NantonCR_Web12_3_.pdf

[2] Alazzani, A., Hassanein, A., & Aljanadi, Y. (2017). Impact of gender diversity on social and environmental performance: evidence from Malaysia. Corporate Governance: The International Journal of Business in Society, 17(2), 266-283.

https://www.researchgate.net/publication/315758565_Impact_of_gender_diversity_on_social_and_environmental_performance_evidence_from_Malaysia

[3] Velte, P. (2016). Women on management board and ESG performance. Journal of Global Responsibility.

https://www.researchgate.net/publication/295858486_Women_on_management_board_and_ESG_performance

[4]https://www.livemint.com/news/india/women-s-representation-in-indian-companies-rises-11576086142768.html

[5] https://www.worldbank.org/en/country/india/overview

[6] Pareek, R., Sahu, T. N., & Gupta, A. (2023). Gender diversity and corporate sustainability performance: empirical evidence from India. Vilakshan-XIMB Journal of Management, 20(1), 140-153.

https://www.emerald.com/insight/content/doi/10.1108/XJM-10-2020-0183/full/html

Sustainability Reporting

ESG Reporting – Not an Option but a Necessity for a Sustainable Future

by with No Comment SustainabilitySustainability Reporting

Exploring the Rise and Relevance of ESG Reporting in India

Investors perceived Covid-19 as the century’s first “sustainability” crisis, resulting in a surge in global ESG investing. According to an EY report, 90% of international investors consider a company’s ESG performance, and 86% prioritise corporate decarbonisation [3]. Due to the significant risks and opportunities associated with ESG issues, companies, investors, and regulators are becoming increasingly interested in ESG reporting. A partner of Omnivore, Mr.Roy explains, “An ESG system is essentially a toolkit to help predict what can potentially go wrong for the environmental and social externalities of a business. These predictions help tremendously with safeguarding business models against risks that are avoidable when approached in the right way” [1]. The Principles for Responsible Investments (PRI) were released by the United Nations in 2006 and established an ESG Reporting Guideline for incorporating ESG factors into business strategy and policy with 2,000 signatories, it is widely regarded as the official reference point for ESG frameworks [4]. 

Aside from identifying and managing environmental and social risks, ESG reporting can build trust and transparency with investors, and attract sustainable investors. Whitney Sweeney, the investment director of sustainability at Schroders states, “In 2021 alone, there were more than 225 new or revised policy initiatives established globally with an ESG focus – the highest number ever recorded and more than double any previous year and expect a continued high level of activity into 2023”[5]. 
With a multi-trillion dollar pool of ESG-driven capital available globally, Indian companies are fast adopting the ESG approach into their overall business models. They recognize their responsibilities go beyond monetary returns to create positive social and environmental impacts as well [3]. This article will look into the rise and associated relevance of ESG Reporting in Indian businesses.

Rise of ESG Reporting In India

One would be amazed to know that there exists a possibility, in which the Indian economy can mobilise $1 trillion by 2030 towards top ESG priorities, particularly for financing the climate transition [6]. As ESG reporting becomes increasingly relevant, Indian corporations are being pressed to disclose their ESG performance. Although, similar to the global trend, there was a surge in awareness and ESG compliance after the Covid-19 pandemic, guidelines were present prior in India to encourage ESG Investments. “Ministry of Corporate Affairs” (MCA) published the “Voluntary Guidelines” on “Corporate Social Responsibility” (CSR), which in 2011 became the “National Voluntary Guidelines” (NVG) on “Social, Environmental & Economic Responsibilities of Business”. There were nine principles in the NVG that represented the “Long-Term Sustainable Value” of Indian companies [8].

The Securities and Exchange Board of India (SEBI) developed a system in 2017 that would allow businesses to voluntarily adopt integrated reporting, which would provide stakeholders with all necessary financial and non-financial information and ensure open communication about the company’s strategy, governance, and performance [8]. In the year 2020, under its Business Responsibility and Sustainability Reporting (BRSR) initiative, the SEBI made ESG disclosures mandatory for the top listed 1000 companies, previously 100 companies under Business Responsibility Report (BRR). This was done so as to increase transparency and encourage companies to adopt sustainable practices [2]. It was through this initiative that BRSR reporting came to be in India. 
Corporate Social Responsibility (CSR) is mandated by the Indian government for companies with a net worth of 500 crore rupees, a turnover of 1000 crore rupees, or a net profit of 5000 crore rupees. At least 2% of these companies’ net profits should be spent on CSR endeavours. ESG profiles should also be disclosed in order to attract capital from global ESG investors and financiers [3]. The Bombay Stock Exchange (BSE) published the Guidance Document on ESG Disclosures in 2018, which acts as a guideline for voluntary ESG reporting. It listed 33 specific issues and metrics on which companies should focus when disclosing their ESG information to investors [8]. The above-mentioned ESG reporting guidelines and government initiatives were set to increase the rate of ESG compliance and thus ESG investments in the country.

Relevance of ESG Reporting for Indian Businesses

At the United Nations Climate Change Conference in Glasgow last year, Prime Minister Narendra Modi set India’s net-zero emission target for 2070, establishing a business case for net-zero emissions [9]. As evident in the term, ESG reporting makes a direct positive impact on environmental issues, employee safety and well-being and governance and policies. With the increased risk of climate change, the relevance of ESG reporting has increased manifold, in regards to Indian companies. Investing in ESG practices will boost India’s growth, reduce environmental risks and reduce its capital raising costs. 

Increased capital and improved risk management are the highlight benefits that companies can achieve by prioritising ESG. For instance, it is more likely that companies with strong environmental practices can access capital from socially responsible investors, as well as face fewer penalties for environmental violations [2]. If Indian companies ignore developing strong ESG frameworks, they can lose INR 7,13,800 crore due to climate-related risks within the coming next five years. In order to attract investors, businesses need to demonstrate climate resilience and aim to eliminate emissions [3]. 
ESG reporting also includes companies in the chemicals, refining, and cement industries. They would have to operate ethically, use available technology to be effective and reduce emissions, and effluent treatment, not discharge untreated waste into the soil, water, or air, and also care for their minority shareholders and the broader community [7].

Next Steps in ESG Reporting 

In terms of environmental and social risks, climate change will be significant for Indian companies as India is among one of the most vulnerable countries that will have to deal with the consequences of the same. Indian businesses, more or less, do not have a choice but to consider ESG factors in their business strategy and risk assessment and thereby start ESG reporting. For successful ESG reporting and investments, expert guidance and education are necessary. Investors should work with investment advisors to identify their ESG and financial preferences when recommending ESG products.

If you are interested in developing ESG reporting at your firm and contributing towards a sustainable future, look no further! Connect with us to gain invaluable insights on how to carry out ESG reporting that would best suit your business and be relevant in today’s evolving market and economy. Our experts can guide you on ESG reporting guidelines, BRSR reporting and innovative strategies enabling your business to thrive in the long run.

List of References  

  1. Shanthi, S. (2023, February 17). ESG investing gains momentum in India. https://www.entrepreneur.com/en-in/news-and-trends/esg-investing-gains-momentum-in-india/445949#:~:text=%22This%20is%20a%206x%20increase,climate%20tech%20investments%20in%20India. Accessed April 17, 2023
  2. The rise of ESG investing in India: What it means for corporations. (2023, February 27). https://www.vaishlaw.com/the-rise-of-esg-investing-in-india-what-it-means-for-corporations/. Accessed April 17, 2023
  3. Lin, B. (2023, January 31). India transforms its ESG landscape to be future-ready. https://timesofindia.indiatimes.com/blogs/voices/india-transforms-its-esg-landscape-to-be-future-ready/. Accessed April 19, 2023
  4. What is ESG Investing? https://www.adecesg.com/resources/faq/what-is-esg-investing/#:~:text=ESG%20Investing%20. Accessed April 19, 2023
  5. Hicks, C. (2023, January 10). ESG investing trends for 2023 | investing | U.S. news. https://money.usnews.com/investing/investing-101/articles/esg-investing-trends. Accessed April 19, 2023
  6. India can attract $1 trillion in ESG Investment: Stanchart. (2022, September 27). https://www.thehindubusinessline.com/markets/india-can-attract-1-trillion-in-esg-investment-stanchart/article65942249.ece. Accessed April 20, 2023
  7. Rise of responsible investing. (2022, April 25). https://economictimes.indiatimes.com/wealth/invest/rise-of-responsible-investing/articleshow/91068701.cms?from=mdr. Accessed April 20, 2023
  8. The importance of “ESG” and its Application in India – LEXFORTI. https://lexforti.com/legal-news/wp-content/uploads/2021/04/The-Importance-of-ESG-and-its-application-in-India.pdf. Accessed April 20, 2023
  9. Tikoo, R. (2022, May 07). How Indian businesses can grow sustainably with ESG approach. https://planet.outlookindia.com/news/how-indian-businesses-can-grow-sustainably-with-esg-approach-news-414652. Accessed April 20, 2023
Cochin Airport

Cochin International Airport: Creating History with Solar Power 

by with One Comment AviationSustainability

Taking a look at the World’s first Solar powered Airport

The sun and its energy have always been ordained as an absolute necessity for the functioning of life on Earth. It is this same necessity that an airport in the state of Kerala, Cochin International Airport Limited (CIAL), has used as a trump card in its journey towards sustainable development.

A report by the International Energy Agency (IEA) states that Global Solar Photovoltaics (PV) capacity is expected to nearly triple between 2022 and 2027, surpassing coal as the world’s largest source of power capacity. According to the analysis, there are signs of diversity in global PV supply chains, with new legislation in the United States and India anticipated to increase investment in solar manufacturing by up to USD 25 billion between 2022 and 2027 [3].

Solar energy has been prioritised in India’s National Action Plan on Climate Change, with the National Solar Mission being one of the primary missions. The Mission’s goal is to position India as a global leader in solar energy by fast developing regulatory conditions for solar technology dissemination across the country [11]. India’s Intended Nationally Determined Contributions (INDCs) objective is to attain around 40% of cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030 and to reduce the emission intensity of its GDP by 33 to 35% from 2005 levels. As of November 30th 2022, solar power installed capacity was around 61.97 GW [11]. By 2026, the Indian industry will be able to produce 100 gigatonnes (GW) of solar modules per year, allowing the country to become a net exporter of solar power. This will considerably help India’s goal of adding 500 GW of non-fossil energy capacity by 2030, according to Bhupinder Bhalla, Secretary, Ministry of New and Renewable Energy [5].

Solar Energy in India’s Aviation Sector

India has set itself an ambitious goal of being the third-largest economy by 2030 and a $5 trillion economy by 2024–25. To reach the targets, there needs to be an increased focus on sustainable growth, which must address climate change issues and accomplish the Sustainable Development Goals (SDGs). The government plans to install 500 GW of renewable energy by 2030, including 280 GW of solar power, with the goal of reducing the nation’s overall carbon impact [12]. The idea of adopting solar power as an option, even for the aviation industry, has been sparked by the desire to lessen reliance on fossil fuels. In order to meet the needs of a large number of passengers, modern airports use a lot of energy in their daily operations, leading to large amounts of carbon emissions [12].

The conversion of Cochin International Airport Limited (CIAL) into a fully solar-powered airport began in the year 2013. CIAL started with a 100kWp Pilot Plant and gradually increased its solar capacity until it became the ‘World’s first Airport to be totally powered by Solar Energy’ in 2015, with an installed capacity of 13.1MWp [6]. In the year 2018, CIAL was awarded the United Nations’ Champions of the Earth environmental award. S.Suhas IAS, the Managing Director at CIAL states that “CIAL’s development policy encompasses Total Sustainability Management (TSM). We try to explore every possible way to address climate change. CIAL which achieved power neutrality in 2015 now becomes a power surplus organisation, feeding approximately 4 crore units of excess power annually to the State grid. And with the help of the Government, we are sure that we can venture into more such projects in the near future” [6].

The following section of this article will look into the solar energy initiatives taken up by CIAL and other initiatives that support their sustainability agendas.

Innovative Initiatives by CIAL

1.    Solar Energy

Solar power has been CIAL’s main focal point in its sustainable journey. At present, CIAL has 50 MWp of installed solar capacity. The airport produces surplus power which is supplied back to the grid. In accordance with a power banking module developed with the Kerala State Electricity Board (KSEB), CIAL contributes as much electricity as it generates throughout the day to the KSEB grid and “buys back” the power from KSEB as needed, particularly at night [1]. CIAL is the second largest energy producer in the state of Kerala, after the Kerala State Electricity Board (KSEB). In addition to maximising available land to install solar panels, CIAL has installed these panels on top of their car parking structure which is called solar carports.

Through its various solar PV systems at the airport, CIAL has produced more than 25 crore units of green energy to date. CIAL Infra purchased 35 acres of property in Payyannur, Northern Kerala, as part of its effort to expand its solar projects outside of CIAL premises, and built an 11.6 MWp solar plant there. This is the first terrain-based installation in India. The Payyannur solar farm was initially intended to be a “captive power plant” to help CIAL satisfy its growing energy needs. However, the Covid-19 outbreak derailed CIAL’s commercial ambitions and caused its energy consumption to slow down. As a result, this facility turned into an “Independent Power Plant ” (IPP) and the KSEB grid receives all of the energy produced by this plant [7]. This plant has so far generated approximately One Crore units of green power.

Relying upon solar energy for the entire functioning of the airport has enabled CIAL in lowering its carbon footprint by 1,60,000 metric tonnes [6]. This green energy initiative will reduce the amount of carbon dioxide emissions from coal-fired power stations over the next 25 years by more than 300,000 tons, which is the same as planting 3 million trees or not driving 750 million miles in automobiles [1].

2.    Photovoltaic Agriculture

With the aid of solar panels, CIAL has initiated Photovoltaic Agriculture. In this procedure, vegetables are grown in vacant spaces between solar panels. The water that is used to wash these solar panels runs off to the vegetables in between, thereby reusing water. The crops are anticipated to alter the microclimates beneath PV modules by lowering the temperature, which boosts power generation efficiency. Additionally, the crop coverage between PV arrays will prevent soil erosion and lessen the amount of dust that collects on the PV module. Another benefit of the cultivation is that it slows weed development around the PV panel mounts [8]. These agro-photovoltaic operations have so far generated about 90 metric tonnes of pesticide-free vegetables [6].

Conclusion

In the current scenario of climate change and the associated challenges that the world faces today in association with climate change, renewable energy is a step in the right direction. Airports, especially international ones, are important to a country’s economic fabric but at the same time contribute to a country’s carbon footprint. CIAL taking up solar energy and venturing into renewable energy has provided both a greater opportunity and a boost to switch to green energy. Other airports would be able to install renewable energy with ample planning along with clearly laying out their sustainability agendas.

References

  1. P.S, J. ICAO ENVIRONMENTAL REPORT – Sustainable Alternative Fuels. https://www.icao.int/environmental-protection/Documents/EnvironmentalReports/2016/ENVReport2016_pg177-177.pdf. Accessed May 2, 2023
  2. How is the World’s first airport fully powered by Solar Energy faring over time. https://www.routesonline.com/airports/5427/cochin-international-airport/news/298663/how-is-the-worlds-first-airport-fully-powered-by-solar-energy-faring-over-time/. Accessed May 2, 2023
  3. International Energy Agency (IEA). Renewable Power’s growth is being turbocharged as countries seek to strengthen energy security – news. (2022). https://www.iea.org/news/renewable-power-s-growth-is-being-turbocharged-as-countries-seek-to-strengthen-energy-security. Accessed May 12, 2023
  4. Richardson, L. (2023, April 26). History of solar energy: Timeline & invention of solar panels: Energysage. https://news.energysage.com/the-history-and-invention-of-solar-panel-technology/. Accessed May 15th, 2023 
  5. Koshy, J. (2023, February 20). India plans to Export Solar Power: Official. The Hindu. https://www.thehindu.com/sci-tech/energy-and-environment/india-to-be-net-exporter-of-solar-modules-by-2026-says-ministry-for-new-and-renewable-energy-official/article66528527.ece. Accessed May 16th, 2023
  6. CIAL’s green energy generation touches 25 Cr. Units. Cochin International Airport. https://www.cial.aero/news-Updates/CIAL-s-green-energy#:~:text=CIAL%20now%20has%20a%20total%20installed%20solar%20capacity%20of%2050%20MWp.&text=Till%20date%2C%20CIAL%20has%20generated,by%201%2C60%2C000%20Metric%20tonnes. Accessed May 16th, 2023
  7. SOLAR POWER PROJECTS. CIAL infrastructure. https://www.cialinfra.in/projects/solar%20power%20projects. Accessed May 16th, 2023
  8. Cochin Airport Scales up agri-voltaic farming with joint production of food and Energy. (2021, December 13). The New Indian Express. https://www.newindianexpress.com/states/kerala/2021/dec/13/cochin-airport-scales-up-agri-voltaic-farming-with-joint-production-of-food-and-energy-2395094.html. Accessed May 16th, 2023
  9. Small Hydro Electric Project (SHEP). CIAL Infrastructure. https://www.cialinfra.in/Projects/SMALL%20HYDRO%20ELECTRIC%20PROJECTS%20(SHEP). Accessed May 16th, 2023
  10. CIAL to commission its 1st Hydropower Project. (2021, October 24). https://www.hindustantimes.com/india-news/cial-to-commission-its-1st-hydropower-project-101635101042584.html. Accessed May 16th, 2023
  11. Current status: Ministry of new and renewable energy, government of India. (n.d.). https://mnre.gov.in/solar/current-status/#:~:text=Solar%20power%20installed%20capacity%20has,and%20has%20achieved%20grid%20parity. Accessed May 12th, 2023
  12. Solar fueling green transformation of Indian Aviation. (2022, December 12). ET EnergyWorld. https://energy.economictimes.indiatimes.com/news/renewable/opinion-solar-fueling-green-transformation-of-indian-aviation/96162613. Accessed May 25th, 2023
The Prime Minister, Dr. Manmohan Singh delivering Statement at the fourth Plenary Session of the UN Conference on Sustainable Development (Rio+20), at Rio de Janeiro, Brazil on June 21, 2012.

Sustainable Development Goals : Nations roadmap to building a sustainable future

by with No Comment Sustainability

A background on how SDGs came into existence

The SDGs were drawn up at the United Nations Conference on Sustainable Development in Rio De Janeiro in 2012 with the sole purpose of combating the world’s urgent environmental, political, and economic challenges. It is well understood that eradicating poverty and other forms of deprivation must be combined with efforts to improve health and education, minimise inequality, and boost economic development all while combating climate change and aiming to preserve and defend our oceans and forests.


In order to do this, the Division for Sustainable Development Goals ( DSDG ) delivers significant support and capacity-building for the Sustainable Development Goals (SDGs) and relevant thematic issues. Furthermore, to make the 2030 Agenda a reality, broad ownership of the SDGs must be translated into a firm commitment to achieving the global goals by all stakeholders. The 2030 agenda for Sustainable Development is the framework for peace and prosperity for the people of the planet today and tomorrow. At its very core, there are 17 Sustainable Development Goals, also termed as SDGs, which are an immediate call for action by all nations, developed and emerging. These 17 SDGs mark a significant change in the vision and goals of the United Nations. What makes them especially different however is the comprehensiveness. Not only does the agenda include individual contribution, but it also makes collective communities and societies of all strata a stakeholder too.

The SDGs as a Global Movement

As a comprehensive agenda, it brings together all individuals and nations to the same table at the same time regardless of their developmental stage and with transparent agendas. All organizations are seen as equal partners in the long-term sustainability agenda. In simpler words, the paradigm shift stems from encouraging individuals from all corners of the globe to become involved, engaged, and invested in our world as a whole, each with their own duty, accountability, and hope for long-term success.

One of the characteristics of the Sustainable Development Goals that stands out is its scope. The element of obligation is the first feature that demonstrates this. As compared to the MDG’s, this agenda focuses on the responsibility of the world as a whole and not just a niche of people. The other really important characteristic is the interrelationship between the goals. For example, although goal number is the eradication of poverty and hunger, without employment and economic growth or even quality education, it cannot be entirely achieved.

17 SDGs include the following :

GOAL 1: No Poverty
GOAL 2: Zero Hunger
GOAL 3: Good Health and Well-being
GOAL 4: Quality Education
GOAL 5: Gender Equality
GOAL 6: Clean Water and Sanitation
GOAL 7: Affordable and Clean Energy
GOAL 8: Decent Work and Economic Growth
GOAL 9: Industry, Innovation and Infrastructure
GOAL 10: Reduced Inequality
GOAL 11: Sustainable Cities and Communities
GOAL 12: Responsible Consumption and Production
GOAL 13: Climate Action
GOAL 14: Life Below Water
GOAL 15: Life on Land
GOAL 16: Peace and Justice Strong Institutions
GOAL 17: Partnerships to Achieve the Goal

At the Sustainable Development Summit – 2015, 193 countries officially adopted the SDGs. As the SDGs make all the nations globally a stakeholder of this agenda, the Nationally Determined Contribution (NDCs) are a way of ensuring that all 193 nations play a part.

How Nations can do their part?

People-centered, universal, transformative, and interconnected is how the new agenda functions. It urges all countries to take action for all people in five vital areas over the next 15 years: citizens, environment, development, stability, and partnership. Since 2017, humans are thought to have contributed to a rise of 1.0°C above pre-industrial levels. In about 140 years, sea levels have risen around 20 cm and in another 80, it could rise by another 30-122 cm. It is vital for countries to take up responsibilities as the numbers look extremely dire.


To battle this, 196 parties came together under the umbrella of the Paris Agreement in 2015 aiming to limit warming to 1.5 to 2 degrees above pre-industrial levels. The NDCs are at the core of the solution to this problem. They are in a nutshell, climate plans that highlight climate activities that national governments intend to enact in response to climate change. India for example pledged to produce an additional carbon sink of 2.5-3.0

1 billion tonnes of CO2 equivalent by 2030 as part of the 2015 Paris Agreement’s Nationally Determined Contribution (NDC) goal. To attain this, India is going to have to produce an additional 25 – 30 million hectares of forest cover by 2030. This is equivalent to a whopping 46.7 – 56 million football fields.
As a remedy for this, Green India Mission (GIM) is one of the 8 missions under the National Action Plan on Climate Change (NAPCC) launched in 2015 with objectives in line with meeting the Paris agreement. GIM aims to raise forest cover by 5 million hectares, which again is equivalent to almost about 9.3 million football fields over a period of ten years. Although there is a lack of data in this case, according to a NAPCC results survey, GIM missed its targets by 34% in 2015, 2016, and 2017. Just 44,749 hectares of land received green cover. GIM continues to fall short of its annual goals due to a lack of financial support at both the federal and state levels, moving the NDC goal farther away.


To wrap it up, despite the fact that the SDGs are not legally binding, governments are motivated to establish national structures in order to achieve them. The SDGs are interconnected and undivided, integrating the fiscal, societal, and environmental aspects of sustainable change, while the Paris Agreement is in line with the 2030 Agenda and calls for immediate climate action. SDGs provide a solid framework for nations to plan and design their NDCs to meet the 2030 agenda while monitoring progress. SDGs play as an important roadmap for countries and act as a cornerstone helping them align to progress and sustainable global development.

Biofuel

Sustainable Pathways for Industrial Energy Use in India – Route 2

by with No Comment Uncategorized

Biomass-based energy sources as alternatives for Industrial energy
consumption

Biomass-based energy potential in India

In the last article, the Renewable Energy share of the Indian Power sector was overviewed. Further to the discussion on industrial consumption and Waste Heat Recovery scenarios, this article delves into another alternative energy source. Given earlier that 50 per cent of the energy consumption in India is owed to the industries, the sector holds vast possibilities in shifting towards a low carbon future. General practice among the farming community of the North-West region of India is stubble burning. Stubble is the stalk of cereal crops left sticking out of the ground after the grain is harvested. A controversy has erupted between various entities that this practice has been a major contributor to the steep levels of air pollution in the National Capital Region (NCR). Irrespective of whether the reason holds sufficient water, it is important to note the significant potential biomass waste holds for meeting power demands. The Punjab state is one of the largest producers of rice. Rice being a cereal crop, once the grain is harvested, it leaves behind a stubble that some members of the farming community believe is easier to get rid of by burning, rather than arranging labour or tools to pluck it out. A report submitted by a Supreme Court appointed Authority stated that incentives allotted per unit were unviable for a farmer to avoid burning of stubble.(1)

Looking away from the problems and searching for solutions, many industries have built themselves into energy producers, by taking advantage of a blame game situation. Taking into account the calorific value of such crops, the waste holds key to unlocking alternative energy sources for industrial captive use or distribution of energy. A study by the Indian Institute of Science (IISc) Bangalore found that biomass availability in terms of agricultural residue in India ranged between 120 and 150 million tonnes per year. The Indian Power Ministry observed that India holds the potential to generate nearly 18,000 MW of power from biomass(2). This number is nearly equivalent to twice the power demand of the state of Karnataka (3).

Rural Greenification through biomass energy
scenarios

The advantage of biomass-based power generation is that it is a process of cogeneration of power. Apart from the generation of electricity, it also generates heat that can be utilized for other industrial processes. Rural industries can make significant use of this concept to reduce their external energy dependency, and by introducing such concepts, they can further increase their renewable energy share. An observation by the Power Ministry of India found a clean energy scenario wherein rural industries could support themselves with 7000-8000MW of power generation through bagasse based
cogeneration in sugar mills. Biogas is another derivative from bio-based or organic waste in rural areas that can meet domestic needs such as cooking and hot water. Biogas plants have the advantage of being set up on small scales in villages, where the community can contribute their biomass waste to generate biogas for supply through local distribution pipes. Rural areas have the disadvantage of not being able to consistently receive gas distribution such as LPG, CNG and LNG from the state due to logistics and supply issues. Biogas can set off an independent evolution among villages to become self-sufficient and sustainable.

Pros and Cons of the biomass energy future

The disadvantage that biomass power holds over fossil fuel-derived power is the supply chain reliability. Biomass availability may not be year-round depending on the crop whereas coal mining is perennial. Crops yield biomass residue according to their growth cycles and hence a consistent supply chain holds a challenge against the adoption of the concept.


Biomass-based power holds a unique advantage over conventional renewable energy sources such as solar and wind power. Where solar and wind are generally viewed as having intermittent sources, biomass power can be observed to be much more consistent. In addition, biomass power can serve as a baseload for the power demand in contrast to solar and wind power serving the peak loads. Storage is relatively easier in case of biomass, by the simple concept of storing the raw material itself as compared to solar and wind, which require storing of the electricity using batteries or other forms of storage, which are not completely sustainable and much more expensive. Through effective planning and collaboration, biomass can overcome supply chain challenges. Biomass based power can certainly hold an upper hand being carbon neutral as compared to both fossil fuels and other conventional renewables where the supply is intermittent or variable. Biomass power has the potential to turn India greener, both in the urban areas and the rural.

List Of Reference :

[1] The Hindu, Online News Article dated 01 October 2020
[2] EnergyWorld.com, From The Economic Times
[3] Power Ministry of India, https://powermin.gov.in/sites/default/files/uploads/joint_initiative_of_govt_of_india_and_Karnataka.pdf

Circular Economy

Circular Economy: A Substitute for Linear Economy Understanding the crucial need to shift towards a Circular Economy

by with No Comment Uncategorized

Global warming coupled with climate change has created acute global sustainability problems which require immediate attention. The only feasible and reliable solution for the situation that has emerged over the last few decades is an alternative economic approach—shifting from the unidirectional economic model, i.e., Linear Economy (LE) to Circular Economy (CE). Before we dive into Circular Economy and its importance, let’s have a microscopic view of Linear Economy and its disadvantages.

Linear Economy: No light at the end of this tunnel

A linear economy is commonly known as the “take-make-dispose” economic model. It can be defined as an economy where raw materials are processed to be transformed into finished products. The products are used by the consumers according to their needs/preferences and finally, thrown away as waste. The value or revenue in this model is generated from the production and sale of the products.
In a linear economic model, all the raw materials collected to create the products are finally disposed of in landfills. Theoretically, a successful linear economy is sustainable in the future only if there is an infinite supply of raw materials. Unfortunately, this is far from the truth. The steady decline of essential raw materials has already begun, shifting the balance of demand and supply.


The present economy is only profitable by continuous extraction of resources and consumption of products. But a vast majority of virgin resources are finite and are bound to get exhausted. And when it does, the linear economy will collapse, irrespective of how profitable or valuable it is.
Furthermore, let’s consider an ideal situation of being blessed with an infinite supply of raw materials. We will still be plagued with a colossal amount of discarded products that negatively impact the environment and need exorbitant management techniques to store the waste. Evident from the alarming global sustainability issue and burdened with the knowledge that demand will never stop, economists ventured to find a solution to the quintessential question—how to grow the economy without exhausting our planet’s resources? The environmental deterioration cannot be ignored, nor can we afford to give up our way of living. Where do we draw the line? Where is the middle ground to economic sustainability?

Circular Economy: The stairway to a sustainable future

The circular economy is a disciplined strategy to a regenerative economic design that is advantageous to businesses, society, and the environment or, simply put—benefits people, profit, and the planet.

Unlike the linear economy, which is unidirectional, a circular economy is cyclic. It’s a “take-make-recycle” model aimed at reducing the consumption of finite resources without affecting the value generated from them. Circular economy has numerous benefits —both environmental and economic when compared to the current linear economy.

Environmental Merits

A circular economy constructively aids our environmental improvement goals by the ripple effect. It reduces greenhouse gas emissions due to decreased use of raw materials; Less raw materials used results in minimized resource extraction by up to 70%; A scale down in resource extraction and production reduces the pollution and landfill overflow. [1] Additionally, overall reduced production and disposal of products significantly lessens the land use, soil, water, and air pollution, and helps in climate change. Following the circular economy model in the agricultural arena boosts the soil nutrient value and health. When the waste is returned to the soil through anaerobic processes or composting, the ecosystem balance is restored. [1]

Economic Merits

Economically, circular economy can be a game-changer. In a resource-dependent linear economy, companies often face the price volatility of raw materials due to geopolitical crises and untold environmental crisis. However, circular economy eases companies’ dependency on raw materials and aids them to become more resilient and less risk-driven. [1]

The circular economy can reshape the current business model. Products no longer needed to be owned by the customers; instead can be rented or leased depending upon the type of products and need of the customers. Manufacturers remain responsible for the products, and they only rent their service to the customers. This leads to a radical change in building and maintaining the products since engineers and designers know how to take care of the products to make them last longer. This service-based model also increases consumer interaction and can promote more customer satisfaction and loyalty. [1]


A prime factor in a circular economy is that revenue is not directly proportional to resource consumption, leading to products and materials becoming more functional, reusable, and repairable. New revenue-generating services are created, which potentially increases the GDP and, therefore, the economic growth. [1]


Businesses also profit from reduced energy consumption, lower input costs, cutting costs off with
waste, etc. Profit opportunities are immense in a circular economy; all it needs is proper
understanding and implementation. [1]

The roadmap ahead begins by looking behind

Although the term is recently coined, the concept of circular economy has been around for centuries. When humans lived in sync with Mother Nature and considered ourselves a part of the earthly life cycle respecting nature for its countless blessings, the circular economy was functional, albeit in its crude form.


A sustainable human society needs a sustainable economy. Circular economy out guns linear economy and is a much better substitute to the economic sustainability problem. It’s about time we re-embrace our relationship with nature and use the technology and tools at our disposal to create a sustainable economy that not only benefits this generation but generations to come.

References:

  1. Youmatter. 2021. Circular Economy – Definition, Principles, Benefits and Barriers. [online] https://www.google.com/url?q=https://youmatter.world/en/definition/definitions-circular-economy-meaning-definition-benefits-bar&sa=D&source=apps-viewer-frontend&ust=1683967633687371&usg=AOvVaw3pyAhiuHwIH07_tJuewmF7&hl=en-GB
    Available at: [Accessed 31 March 2021].