"Driving Green Business Globally" - My reflections from COP 26, Glasgow

06 November 2021

Earlier today, I had the chance to share my thoughts at COP 26, Glasgow.?

Amongst the hectic pace of the event and the cacophony of voices clamouring for attention, I thought it best to pen down my thoughts for two reasons - to communicate my points clearly and second to have a point of reference to see how much we progressed along these lines over time.??

At the outset, I would like to thank VDMA and colleagues at thyssenkrupp for the opportunity. It is fantastic to have a chance to voice my opinion on such an important topic. Equally it has been a fantastic opportunity to listen to the thoughts and ideas of others and I look forward to adopting some of these in the days ahead.

COP 26 has brought together Heads of State, business leaders, activists and media like never before. It is a melting pot where extensive discussions are happening on how we can course correct especially when all the data presents a grim picture and the effect of climate change is becoming more and more visible with every passing season and year. There is a sence of urgency that is palpable and one can almost feel a certain impatience in people seeking concrete action from those who run the world.

"There is a sence of urgency that is palpable and one can almost feel a certain impatience in people seeking concrete action from those who run the world."

Every one realizes this and therefore many commitments are being made from leaders across the world. On the one hand there are the developed economies with high per-capita emissions and on the other side there are developing economies with rapidly rising gross emissions (even with low per-capita levels). Such is the urgency, that every one needs to pitch-in to make a difference - we have no other choice. Therefore, it came as a positive that in the intial days of the conference, Shri Narendra Modi, Prime Minister of India made five commitments at COP 26:

1. India will take its non-fossil energy capacity to 500 GW by 2030
2. India will meet 50% of its energy requirements from renewable energy by 2030
3. India will reduce the total projected carbon emissions by one billion tonnes from now till 2030
4. By 2030, India will reduce the carbon intensity of its economy by less than 45 percent
5. By the year 2070, India will achieve the target of Net Zero

(source: https://www.mea.gov.in/Speeches-Statements.htm?dtl/34466/National+Statement+by+Prime+Minister+Shri+Narendra+Modi+at+COP26+Summit+in+Glasgow)

These are all bold and ambitious goals, however in the context of our global situation regarding climate change, these are very much required. The big question is how? how fast? and what more can be done? - the answers to all of these questions are complex and certainly not easy to realize.

Let me go back to the year 2002, when I was a young student pursuing the Masters program on Energy & Enviornmental Management at IIT Delhi. Back then, we witnessed COP 8 and one of the key points in the Delhi Ministerial Declaration was the need to "facilitate the transfer of technology to Developing Countries" for minimizing the impact of climate change. This is very much the case even today. After 18 COP conferences since COP 8, the solution still remains the rapid distribution and adoption of technologies across the world that can make a difference. A recent VDMA-BCG study points towards exactly this by stating that 86% of emissions are addressable through currently available technologies some of which are commercially proven as well.

Being a firm believer in the power of market forces and sound economics as the driver of change, I would like to propose three steps for us to realize this potential:

1. Awareness and reporting of embodied emissions in products and services: We need more transparency on embodied emissions in products and services for businesses and consumers to be able to make more discerning, climate friendly choices. This does require a transparent and globally consistent means of measuring emissions from "cradle to grave" for any products and services that are on offer. For example, it would have taken me approximately 1 ton of CO2 emissions to reach Glasgow by flight (despite the option to attend in person, I made the choice of attending sessions virtually) but I have no way of knowing what would be my footprint for services consumed along the way and while I would be there in person. Such transparency is not easy to achieve - it requires a proper assessment but at the same time it must be practical to undertake. Further, it must be made essential for businesses to report the same following established protocols. "Knowing" embodied emissions is the first step towards empowerment of businesses and consumers in making climate friendly choices in their day-to-day life!

"Knowing embodied emissions is the first step towards empowerment of businesses and consumers in making climate friendly choices in their day-to-day life!"

2. Providing a level playing field through market mechanisms for "Green" products and services: We need markets which are able to place green products on a level playing field with products that are not so green but cheaper to produce. It is important that products and services are rewarded for having lower embodied emissions compared with competing offerings. Governments across the board will have to evaluate how they will enable this both for domestic markets and for international trade. Considering that most supply chains today are global, this requires careful consideration of not just embodied emissions in products but also for associated logistics which can add significantly to emissions, something that is not always reflected in pricing alone. Recently great progress has been made globally to agree on tax rates across countries, a similar approach would be required to place a tax on carbon emissions or a price for emissions avoided. I personally believe we need to be (and can be) as diligent in accounting for carbon as we are for accouting for taxes such as GST - what I mean is, it can be done!

3. Funding for "Green" technology adoption at scale across the globe: It has been estimated that ~17 Gt CO2 equivaltent GHG emissions are from manufacturing industries. This represents ~50% of OECD and BRICS emissions (source: For Machinery Makers, Green Tech Creates Green Businesses, BCGxVDMA report, July 2020). Most industrial businesses across the world build plants with significant upfront capital investments that typically have a design life of 25-30 years, at times even more. Capital investments of this nature also have long payback timelines which also serves as entry barriers. It would be too long and too damaging to wait for end of design life to make the transition towards green technology in capital intensive industries. Therefore, it is important to find market mechanisms and government support to fund the adoption of green technology at scale across the globe. Current focus of the financial community is prioritizing allocation of fresh investments towards new projects that are "green" (this is highly appreciated!) - but what about all the high-emission operations that are already in place? Without a meaningful effort towards making the existing installed base greener, we will struggle to realize our emission objectives. Therefore, funding the transition of existing plants and operations is as important as driving new projects to adopt greener options.

I am fully aware that the asks above are easy to state but require a lot of effort and energy to realize. But do we have a choice? I belive not. What we certainly must avoid is thinking and acting in silos - this is not a problem for one country or region - this is an issue we face across the world, the impact and consequences of our actions (or in-action) will be felt everywhere. The urgency and need for decisive action is something that we must all feel and work on. It is OK to be imperfect in our frameworks and actions, but it is not OK to go on discussing and fail to act in the process.

"It is OK to be imperfect in our frameworks and actions, but it is not OK to go on discussing and fail to act in the process."

What are your thoughts? Would you agree with my views above or are there aspects that I missed? Would be great to see your comments - so please do share!

post script:

Some key outcomes from COP 26 for easy reference (...and it clearly indicates progress, but is is enough?):

• Global Methane Pledge
• EU-Catalyst Partnership
• Mission Innovation
• Glasgow Leaders’ Declaration on Forests and Land Use
• €1 billion pledge to?Global Forests Finance Pledge
• Glasgow Breakthrough Agenda
• Just Transition Declaration
• Global Coal to Clean Power Transition Statement
• €100 million pledge to UN Adaptation Fund
• Final text commits developed countries to reach the $100 billion goal in climate finance as soon as possible and commit doubling the collective share of adaptation finance to $40 billion annual target for 2025.??

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Views and opinions expressed in this article are personal.

Link to the COP 26 session is https://cop26eusideevents.app.swapcard.com/event/eu-side-events-cop26/planning/UGxhbm5pbmdfNzI1NDYy

Vivek is Managing Director & CEO of thyssenkrupp Industries India (tkII) a business founded in 1947 and part of thyssenkrupp AG. He is responsible for a diverse portfolio of businesses spanning Cement, Power, Mining, Sugar and O&M/associated services. He is passionate about sustainability and digitalization and is actively driving the same in the industries that tkII serves. tkII is a leader in "Green" technologies such as Waste Heat Recovery in Cement, FGD for power, Bio-energy, Sugar based energy solutions, sustainable mining through energy efficiency to name a few. Prior to this, he was CEO Asia Pacific at thyssenkurpp AG. He is also an Independent, Non Executive Director on the Board of GMM Pfaudler Ltd. He is also a member of the FICCI Bio Energy Committee and member of the National Executive at the Indian Chamber of Commerce. Vivek has worked in the past at BCG where he was awarded the BCG Olympics Gold Medal for outstanding & transformative client work and at EIL in the oil & gas sector for several years.

Vivek is an MBA from IIM Calcutta, Masters in Energy & Environmental Management (Gold Medallist) from IIT Delhi, BE in Mechanical from Delhi College of Engineering, University of Delhi.