Module 2: Policy Landscape (Net Zero Course 101)

Module 2: Policy and Regulatory Landscape

2.1 Global Climate Agreements

• 2.1.1 Paris Agreement & Others
• 2.1.2 Impact on Business Strategy2.2 National and Regional Policies
• 2.2.1 Regulatory Compliance
• 2.2.2 Incentives for Sustainable Practices

Need For Policy & Regulatory Landscape

Coming Together on a Global Scale

• Why It's Essential: Saving our planet is a collective effort. We need a global agreement, a sort of shared playbook, to tackle climate change. Think of it like setting the same guidelines for all nations and businesses.
• Making Life Easier for Businesses: Businesses operate globally, and having a common set of rules everywhere simplifies things. It's like ensuring everyone speaks the same language in the sustainability journey.

Preventing the Domino Effect

• Why It Matters to Us: What happens in one part of the world impacts us all. If a country doesn't follow the same rules, it could create challenges for everyone else. It's about ensuring fairness and a level playing field for all nations.
• Ensuring Fair Play: We want to avoid a situation where businesses move to regions with weaker rules, leaving behind environmental challenges. Global rules help maintain fairness, preventing any imbalances.

Collaborating for a Greener Tomorrow

• Sharing Responsibilities: Climate change is a shared challenge, and collaboration is key. A global agreement encourages nations to support each other—sharing knowledge, resources, and technologies for a greener future.
• Supporting Each Other's Growth: Some nations might need support to adopt sustainable practices. Global rules encourage stronger nations, like ours, to assist others, ensuring everyone has the chance to contribute to the green revolution.

Inspiring Innovation and Investments

• Getting Everyone on Board: When the rules are clear, businesses know what's expected. This clarity encourages them to invest in innovative ideas and technologies that contribute to our collective green goals.
• Attracting Sustainable Investments: Investors appreciate commitment to sustainability. Global rules signal that we're serious about going green, attracting investments in clean energy and technologies that benefit us all.

Ensuring Accountability and Transparency

• No Hidden Agendas: Global rules mean everyone has to be transparent about their efforts. It's like being part of a team where openness and shared commitment are crucial.
• Being Transparent: Following global standards helps us measure and compare efforts. It's like playing a fair game where everyone follows the same rules, and we can see who's making a significant impact.

Preparing for Climate Challenges

• Getting Ready for Change: Climate change brings uncertainties, and we need a strategy. Global rules help us prepare and adapt to changes, making sure we're resilient in the face of environmental shifts.
• Caring for Our Ecosystems: Following the rules means safeguarding our natural world. It's like ensuring our ecosystems are healthy and can withstand the changes that come with sustainable actions.

Global Agreements

Imagine the Paris Agreement as a global gathering, a momentous family reunion where nations agreed that the Earth needed a collective intervention against climate change. It's akin to a planetary pact, a shared commitment to tackle the rising temperatures that affect us all.

For Us in India: This agreement isn't just a distant promise made by nations; it's a call to action for companies right here in India. It's more than an international pact; it's an invitation for our businesses to join the global green brigade, signaling our dedication to crafting a sustainable future for generations to come.

Kyoto Protocol (1997)

Picture the Kyoto Protocol as the wise elder of the international family, offering crucial insights back in '97. It was a declaration to developed nations: "Cut down on those emissions; it's time to be responsible." It's like the sage advice of a trusted aunt, urging everyone, including businesses, to play fair and prioritize environmental responsibility.

For Companies In India: While these protocols didn't speak directly to businesses, they set the tone for responsible practices. It's akin to the elders saying, "Let's build a world where everyone, including companies, plays a fair and green game."

Science-Based Targets Initiative (SBTi)

SBTi steps in as the nerdy cousin, introducing science-based targets for emission cuts. It's not merely about claiming a commitment to sustainability; it's about substantiating those claims with quantifiable numbers—a report card that measures our progress towards meaningful and impactful sustainability.

In Our Context: Companies embracing SBTi are essentially saying, "We're not just talking the talk; we're walking the walk, and here are the numbers to prove it." It's a steadfast commitment to measurable and impactful sustainability practices.

How They Push Companies to Do Better

1. Setting Clear Expectations: These agreements establish clear global expectations for emissions reduction and sustainable practices, setting a standard for companies to follow.
2. Global Recognition: Companies adhering to these agreements gain global recognition for their commitment to environmental stewardship, positively impacting their reputation.
3. Market Competitiveness: With an increasing focus on sustainability, companies aligned with these agreements are better positioned to remain competitive in a market that values environmentally responsible practices.
4. Access to Funding: Many initiatives attract funding and support for companies dedicated to Net Zero goals, providing financial incentives for sustainable practices.
5. Supply Chain Influence: Companies involved in these agreements often influence their supply chains to adopt sustainable practices, creating a ripple effect throughout industries.
6. Legal and Regulatory Compliance: Adherence to global agreements aligns companies with emerging environmental regulations, reducing legal risks and ensuring compliance.

Regulatory Landscape In India Supporting Net Zero

National Action Plan on Climate Change (NAPCC): You know, back in 2008, India launched this cool strategy called the National Action Plan on Climate Change (NAPCC). It's like our country's game plan to tackle climate change head-on. There are eight national missions in there, like solar energy, sustainable agriculture, and making our habitats more eco-friendly. It's not shouting "net zero" from the rooftops, but it's laying down the foundation for a greener future.

Nationally Determined Contributions (NDCs): Fast forward to the Paris Agreement commitments, India submitted its Nationally Determined Contributions (NDCs). Okay, it might not scream "net zero," but here's the deal: India's pledged to cut the intensity of emissions compared to our economic output by a solid 33-35% by 2030. That's no small feat, right? Plus, we're pushing to make 40% of our total energy capacity non-fossil. It's like saying, "Hey, we're serious about cleaning up our act!"

Perform, Achieve, and Trade (PAT) Scheme: Ever heard of the PAT scheme? It's part of the National Mission on Enhanced Energy Efficiency. Fancy name, but it's basically a superhero move to boost energy efficiency, especially in industries guzzling a lot of power. You know what that means? It's indirectly helping us inch closer to those net-zero dreams.

Renewable Purchase Obligation (RPO): Alright, buckle up for the Renewable Purchase Obligation (RPO). It's like the rulebook saying, "Hey, companies, you gotta get a certain chunk of your electricity from renewable sources." Talk about a nudge in the green direction, right? It's basically encouraging businesses to ride the renewable energy wave, doing their part to cut down on carbon.

Electric Vehicle Policy: Zooming into the Electric Vehicle Policy, different states in India are championing the cause. It might not scream "net zero" outright, but promoting electric vehicles is like telling the world, "We're revving up for a cleaner, greener ride." It's like nudging us away from those gas-guzzlers, one electric car at a time.

Green Building Standards: Now, onto the cool world of Green Building Standards. The Bureau of Energy Efficiency (BEE) has laid down some energy efficiency rules for buildings. It's like encouraging architects and builders to think green when they're sketching and constructing. Imagine the impact if all our buildings were energy-efficient!

Benefits Of Being Sustainable / Incentives For Net Zero

Government Subsidies and Grants: One of the primary incentives for businesses in India venturing into sustainability is the availability of government subsidies and grants. These financial aids aim to alleviate the initial investment burden associated with adopting eco-friendly technologies. For instance, companies in the renewable energy sector, like ReNew Power, have benefited from government subsidies, enabling them to invest in solar and wind energy projects. The result? Reduced reliance on non-renewable sources and a substantial decrease in carbon footprints.

Carbon Credits and Trading: India's active participation in global carbon credit markets provides yet another avenue for businesses to gain incentives. By implementing carbon reduction measures, companies can earn carbon credits that can be traded on international markets. Take the example of ITC Limited, a diversified conglomerate. ITC has strategically invested in sustainable forestry practices, not only earning carbon credits but also contributing to afforestation efforts. This dual impact aligns with both environmental conservation and economic benefits.

Tax Benefits and Exemptions: The Indian government recognizes and rewards companies championing sustainability through tax benefits and exemptions. For instance, under Section 80-IAC of the Income Tax Act, startups involved in specified businesses, including renewable energy, can enjoy a tax holiday. Suzlon Energy, a key player in the wind energy sector, has leveraged such incentives to not only reduce tax liabilities but also amplify its investments in renewable energy projects.

Market Recognition and Brand Enhancement: Beyond monetary incentives, businesses engaging in sustainable practices often witness enhanced market recognition and brand value. Companies that prioritize sustainability are increasingly preferred by eco-conscious consumers. Take the case of Titan Company Limited, a major player in the consumer goods industry. Titan's commitment to responsible sourcing of raw materials and ethical business practices has not only earned it market credibility but has also bolstered its brand image as a socially responsible entity.

Employee Engagement and Productivity Gains: Companies that invest in sustainability initiatives often experience heightened employee engagement and increased productivity. This is particularly evident in the case of Infosys, a global IT services company. Infosys has strategically integrated sustainability into its corporate ethos, engaging employees through initiatives like green campuses and energy-efficient practices. This approach not only fosters a positive workplace culture but also contributes to increased operational efficiency.

Module 3: Integrating Net Zero into Corporate Strategy

3.1 Setting Net Zero Targets

3.1.1 Science-Based Targets

3.1.2 Scope 1, 2, and 3 Emissions

3.2 Aligning Net Zero with Business Objectives

3.2.1 Integration with Mission and Vision

3.2.2 Linkage to Long-Term Sustainability Goals

The article is a joint effort by Rahul Kumar , senior PhD scholar at Indian Institute of Management, Ranchi in the field of Strategy & me.

If you are looking for help in reducing your Scope 1 emissions, you can reach out to me ( Shreeya Shukla ) to offer innovative Carbon Capture techniques that are not present in the market yet publicly

If you believe your company has set an example in the sustainability and it should reach a wider audience, you can connect with Rahul