Sustainability watch outs for the indian industries


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Article on sustainability related regulations, govt schemes and initiatives in India

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Sustainability watch outs for the indian industries

  1. 1. (Published article in on December 19, 2011 - “watch-outs” for theIndian industriesNear term sustainability legislation and initiatives would impact the power generation, textile, financialand automobile industries the most among the Indian businesses, according to a recent survey bycKinetics.The survey which studied 34 upcoming initiatives, throws three key insights on near term sustainabilityimplications for a number of Indian industries: 1. Regulations dealing with resource conservation and sustainability will become more imposing in the future. 2. Voluntary initiatives provide an opportunity for market differentiation 3. A number of soft capital schemes in the renewable energy sector are being introduced to catalyze the sector.Regulations to be more imposingThe study found that regulations are the most important driver of sustainability in businesses in thenear-term forming 29% of the initiatives surveyed (see Figure 1). Majority of these initiatives are eithercap & trade or benchmark guidelines or performance target set up for industries. Since regulations arelikely to pose compliance requirement, we looked at the industry sectors that are going to be impacted.63% of the 30 industries identified in the survey were found to be influenced by one or more suchregulations. Textile sector has emerged as the most impacted industry sector followed by powergeneration, construction and real estate, chemical, automobile and pharmaceuticals among others.Apart from compliance requirements, regulatory initiatives will also have the effect of cost escalation asalso offermeans for newer revenue streams for industries.Competing for market differentiationIn terms of number, regulations are followed by initiatives on sustainability (rating, labeling, andreporting) and these form 23% (see Figure 1) of the initiatives surveyed. The reason for having all theseinitiatives together is because they can be seen as opportunities for gaining competitive advantage asand when consumer and investor desire more transparency in industries’ sustainability practices.Expectedly all such initiatives are primarily voluntary in nature and find most takers among constructionand real estate, retail and textile industries.
  2. 2. Soft capital flow for the energy sectorFinance schemes are found to be among the next most prevalent (at 9%, see Figure 1) of the surveyedinitiatives because of their concentration on three sectors - power generation, financial institutions andrenewable technology. Schemes are introduced in form of both soft loans and subsidies and aimed atleveraging entrepreneurial and private capital’s role in India’s power generation sector. Most of theseare also tied to Indian government’s ambitious target of electrification and renewable power generationin the coming years.Besides, there are number of guidelines, public private partnership and demonstration projects (at 23%,see Figure 1) of sustainability that the survey touched upon. These are initiatives primarily at anannouncement stage and likely to impact agriculture, biotechnology and information technology andindustry sectors already mentioned in previous sections.Surveyed initiatives and industry watch-outs34 initiatives and legislations which impact 30 industries (Fig 2) were studied. They fall under thefollowing 6 categories: a. Regulation, b. Financial support schemes, c. Sustainability rating, labeling, accounting and reporting, d. Guidelines for industries to adopt, e. Public private partnerships, and f. Demonstration project or new announcements to bring sustainability into mainstream business thinking. Figure 1: Categories of sustainability initiatives Regulations 23% 29% Financial support schemes 6% Guidelines 9% 23% 11% Sustainability rating, labelling, accounting, reporting Public private partnership Demonstration projects or announcements
  3. 3. Power generation, construction and real estates, textile, automobile and financial institution emerge asthe industries that has attracted the maximum number of initiatives. Fig 2: Industries impacted All RE Technology provider Wind power tech provider Textile, apparel & footwear Telecommunication REGULATIONS Steel Solar technology provider Railways Financial Institution FINANCIAL SUPPORT Retail SCHEMES Pulp/paper Power transmission and… Pharmaceutical GUIDELINES Power generation Information Technology Healthcare Fast moving consumer goods SUSTAINABILITY Financial institutions RATING, LABELLING, ACCOUNTING & Fertilizer REPORTING Energy Service Companies Dyestuff PUBLIC PRIVATE Consumer electricals PARTNERSHIPS Construction & Real Estate Computer Hardware Chemical PROJECT Chor-alkali DEMONSTRATION/ ANNOUNCEMENTS Cement Biotechnology Automobile Aluminum Agriculture 0 2 4 6 8 10 12 Counts
  4. 4. Table 1 List of near term sustainability initiatives and legislations included in the survey INTERVENTION MECHANISM Technical assistance or grant Cap & trade Disclosure Soft capital funds Benchmark performance target Benchmark guidelines Perform, Indian Renewable Energy Hazardous Waste (Management, Achieve & Trade Carbon Disclosure Development Agency’s (IREDA) Handling and Trans-boundary (PAT) Project (CDP) schemes JNNSM Fuel efficiency norms for vehicles Movement) Rules Renewable Energy Certificates Sustainable Jawaharlal Nehru National Solar Rural Village Electrification Creation of National Environmental Draft E-waste (Management and (REC) Apparel Index v1.0 Mission (JNNSM) Program Assessment & Monitoring Authority Handling) Rules 2010LIST OF SURVEYED INITIATIVES Sunderban renewable energy National mission for sustainable Creation of National Green project India Smart Grid Forum agriculture Tribunal Act European Union’s Registration, Evaluation, Authorization and Restriction Super-efficient Equipment of Chemical substances (REACH) EIA compliance for large Tamilnadu solar power PPP Program legislation infrastructure projects OPIC’s renewable energy investment in India Vehicle recycling center Approach towards green telecom Draft biomedical waste rules National mission for hybrid & National Mission on Sustainable electric vehicles GRIHA rating system Agriculture National Voluntary Guidelines on on Social, Environmental and Economic Responsibilities of LEED India rating system Business Integrated reporting program Green large area development
  5. 5. guidelines Corporate Ecosystem Valuation guidelines Global Protocol for Packaging Sustainability Energy Efficiency Financing Platform (EEFP) India smart grid forum Guidelines on development of solar citiesList of initiatives surveyedTable 1 lists out all of the 34 sustainability initiatives which impact Indian businesses (or are likely to do so) in the near term. It also outlines theunderlying market intervention mechanisms. We have mapped them to 6 mechanisms: 1. Cap & trade schemes 2. Interventions which encourage disclosure 3. Programs for soft capital 4. Technical assistance and grant support funds 5. Initiatives that define benchmark targets 6. Initiatives that just define benchmark guideline