L&T's Ambitious Path to Carbon and Water Neutrality: A Blueprint for Sustainability

Recent developments in the Carbon Border Adjustment Mechanism (CBAM) and global carbon emission reduction efforts have been significant and impactful:

1. Implementation and Expansion: The European Union (EU) has launched the initial phase of the CBAM, marking the world's first carbon border tariff. This mechanism aims to place a fair price on the carbon emissions embedded in the production of certain goods imported into the EU, such as cement, iron, steel, aluminum, fertilizers, electricity, and hydrogen. This measure is part of the EU’s broader strategy to reduce its carbon footprint and encourage cleaner industrial practices globally (KPMG) (ESG News).
2. Consultation and Compliance: The London Metal Exchange (LME) has initiated a consultation to integrate CBAM requirements into its rules, particularly for the aluminum market. This move is intended to streamline compliance with CBAM regulations and enhance the sustainability of the metals trading ecosystem (Recycling Today).
3. Future Obligations and Reporting: During the transitional period (until the end of 2025), importers are required to report the greenhouse gas emissions associated with their imports. From January 2026, financial obligations will commence, requiring importers to purchase CBAM certificates based on the emissions of their goods (LawNow) (KPMG).
4. Global Implications: The introduction of CBAM is expected to have a significant impact on global trade, prompting other countries like Canada, New Zealand, Australia, India, and the UK to consider similar mechanisms. This could lead to broader adoption of carbon pricing and adjustments in international trade practices to meet sustainability goals (KPMG).

These steps are crucial as they align with the EU's ambitious targets to achieve climate neutrality by 2050 and reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels.

As global conversations increasingly focus on sustainability, Larsen & Toubro (L&T) is leading the charge with ambitious goals to achieve Carbon Neutrality by 2040 and Water Neutrality by 2035. This aligns perfectly with recent global events, including the outcomes of COP28, where nations committed to stricter carbon reduction targets and greater investments in green technologies. Here’s how L&T’s initiatives are setting a new benchmark in the industry.

Current Emission Landscape

In the fiscal year 2023, L&T's greenhouse gas (GHG) emissions were recorded at 0.97 million tons of CO2. Despite plans for a 60% revenue increase by FY 2025-26, L&T anticipates a peak GHG emission of 1.1 million tons CO2e by FY 2025-26, followed by a decline. The company’s focus is on reducing emission intensity across Scope 1 and 2 emissions over the next three years.

Reducing Scope 1 Emissions

L&T’s Scope 1 emissions are primarily due to a high share of diesel in the energy mix. To tackle this, L&T has implemented several key initiatives:

1. Switching from DG Set to Grid Connection: This shift reduces reliance on diesel generators.
2. Electric Equipment Adoption: Replacing diesel-powered equipment with electric alternatives.
3. Biofuel Utilization: Introducing biofuels as a cleaner alternative.
4. L&T Mobi Sol: Utilizing foldable solar panels for construction power needs.

Reducing Scope 2 Emissions

To address Scope 2 emissions, L&T’s Green Campus Committee, led by an Executive Director, focuses on decarbonization. Notably, 36 million units (10%) of electricity across L&T is sourced from green energy. Campuses in Powai and Chennai have already achieved carbon neutrality. Key initiatives include:

1. On-Site and Off-Site Solar Plants: Installation of solar plants and partnerships for renewable energy.
2. Solar-Powered Equipment: Usage in various applications such as streetlights and traffic blinkers.
3. Energy Efficiency Measures: Extensive energy conservation efforts across sites and factories.

ESG Compliance and Scope 3 Emission Reduction

L&T places a strong emphasis on ESG compliance among its 10,500 MSME vendors. Through the L&T SuFIn platform, L&T facilitates efficient and transparent B2B transactions, enhancing ESG compliance through mandatory Code of Conduct agreements and supplier surveys.

In 2023, L&T achieved significant milestones in Scope 3 emission reduction:

• Water Management: Recycled 68% of 11 million kL of water, achieving an 8.9% reduction in water intensity.
• Material Recycling: Utilized 24% recycled materials.
• Afforestation: Planted 2 million trees with a carbon reduction potential of 0.15 million tons CO2e.

Transitioning to Green Energy

L&T’s green portfolio includes clean energy, mobility, green buildings, and biofuel process equipment. The company is advancing green hydrogen production and has commissioned a pilot plant producing 45 kg of high-purity green hydrogen daily. Collaborations with McPhy Energy and H2Carrier are paving the way for industrial-scale green hydrogen and ammonia projects.

Driving Digital Transformation in Energy

LTIMindtree is at the forefront of digital transformation in the energy sector, offering solutions for carbon credit trading, emissions management, and decarbonization. With 37% of revenue from green business and significant R&D investment, L&T is positioned as a leader in sustainable innovation.

A Call to Action for MSMEs

L&T’s journey offers valuable insights for MSMEs:

• Modernization and Compliance: Embrace environmentally superior technologies and align with global standards.
• Green Funding: Explore favorable green funding options.
• Carbon Management: Systematically measure GHG emissions, set realistic reduction targets, and pursue green product certifications.

As the world grapples with the urgent need to combat climate change, L&T’s proactive approach to sustainability, from carbon reduction to digital innovation, serves as an inspiring model for industries worldwide. By highlighting achievements and embracing green technologies, companies can not only meet regulatory requirements but also gain a competitive edge in the global market. Let’s transform adversity into opportunity and pave the way for a sustainable future, building on the momentum from recent global commitments to a greener planet.

Reference: https://annualreview.larsentoubro.com/Sustainability.html