Indian Companies Want Clarity on Climate Data Reporting Confusion

a meeting at cop27
The Morning Context
Sharm el-Sheikh, Egypt

Indian Companies Want Clarity on Climate Data Reporting Confusion

At the UN COP27 climate summit at Sharm el-Sheikh in Egypt, a broad mix of people have gathered from the world of finance, including large companies, financial regulators, consultants and industry bodies, in addition to the more predictable lot—NGOs, youth organizations, indigenous peoples and humanitarian bodies. 

The first week of the conference saw an impressive line-up of events themed around the disclosure of climate- and sustainability-related information by companies. These events were attended by the likes of UN secretary-general António Guterres, who admonished firms for making unsubstantiated claims about environmental action, commonly known as greenwashing.  

Most companies are under pressure from investors to disclose data about their carbon footprint, emissions from employees’ air travel and emissions produced by the use of their products by consumers and so on. According to the CDP, a platform for voluntary climate disclosures by firms, the number of companies that share data on the platform has increased 203% since the Paris Agreement was signed in 2015, and 43% over the past year. Apart from this, as part of the Net Zero Asset Managers initiative, 291 signatories have committed to align their investments—$66 trillion of assets under management—with net-zero goals by 2050 or earlier, former US vice president Al Gore informed an audience on Wednesday. 

On Tuesday, billionaire Michael Bloomberg flagged off an event organized by the Climate Data Steering Committee, which is creating a database of corporate disclosures on net-zero commitments. “Companies make net-zero commitments, but we don’t know if they’re actually doing something about it,” said Bloomberg. The data, which will be available for free, will “empower investors to ask companies to do more, and for the public to hold companies accountable,” he added. 

The initiative was endorsed by heavyweights like Ravi Menon, managing director of the Monetary Authority of Singapore, who also serves as chair of the Network for Greening the Financial System, a group of 114 central banks and financial regulators. At the event hosted by the committee, Menon raised another issue. “The good news is that we have a variety of data sources,” he said. “And the bad news is that we have a variety of data sources.” In other words, while companies are reporting data, there is no way to compare different types of data sets. “We need to ensure that data is interoperable and comparable,” he said, adding that this needs to happen at every stage: Data generation, aggregation, mapping and cataloguing. 

At the event, MSCI CEO Henry Fernandez (he also spoke to me earlier) said that having good data is essential to start building valuation models that incorporate climate risks. While financial data standards have developed over a century, climate data was “a new world”, he added.

Indian firms are also in a tight spot when it comes to climate-related disclosures. From this financial year onwards, the Securities and Exchange Board of India has made it mandatory for the top 1,000 listed firms to file a “Business Responsibility and Sustainability Report”. This follows the “Business Responsibility Report”, which has been mandatory for firms since 2019. “In the last two years, because of various global developments, we thought there was a need to revisit our [Business Responsibility Report] framework,” SEBI executive director Amarjeet Singh told an audience at the India pavilion at COP27 on Wednesday. He added that investors had started asking companies to make such disclosures to understand the risks and opportunities related to sustainability. “They were anyway seeking those disclosures. We have just supplemented that effort,” he said. 

In order to help audit these disclosures, the Institute of Chartered Accountants of India has set up the Sustainability Reporting Standards Board and trained 1,000 chartered accountants. The board will ensure that 5,000 professionals are trained in the next three years, Sanjeev Kumar Singhal, who chairs the board, said at the Climate Data Steering Committee event.

Indian companies have mixed feelings about these, particularly reporting under different metrics and standards to different investors. “Currently, we are in an alphabet soup,” said Prabodha Acharya, chief sustainability officer of JSW Steel, India’s leading steelmaker. “Too many people are asking for too many different things. Investors are asking for different reporting, civil society is asking for different reporting, and there are multiple international standards.” He noted that there was a “burden” on companies to report. “We are looking forward to consolidation [in standards],” he added. 

Vishal Bhavsar, head of corporate sustainability at UltraTech Cement, shared similar concerns. “All corporates are going through a fatigue of disclosures,” he said. He suggested that investors come together to propose a common set of requirements, where companies could just put up data on their websites. At a different event, Shemara Wikramanayake, CEO of Australian conglomerate Macquarie Group, said she has been “begging” people to create a uniform system of reporting climate data. “There are so many standards under which one can report. We have 2,000 people on it,” she said.

However, representatives of two Indian industry bodies had other concerns. “It is easier for large companies who have the resources and staff to prepare reports. What about small and medium enterprises?” said one of them. “We are all very anxious.”   

On the sidelines: A matter of priorities

Many wonder why it is SEBI, a market regulator, and not the Ministry of Corporate Affairs that has made it mandatory for firms to report sustainability data. “Is SEBI competent to look at sustainability-related disclosures?” an audience member asked Surabhi Gupta, a general manager at SEBI. The regulator had already penalized a sugar company for incorrect disclosures, said Gupta, with a smile.

Speaking of regulators, pension funds across the world are worried about the climate risks of their investee companies. MSCI CEO Fernandez, too, had told me that the global index provider was working with pension fund clients to reweight their stock portfolios. But India’s pension funds regulator does not seem to be as worried. An official from a prominent London-based finance firm said that when he visited the office of the Pension Fund Regulatory and Development Authority in Delhi, no official seemed interested in talking about climate risk. “They seem more focused right now on getting people to open pension fund accounts, which is fine,” he said. “But they should look into climate risks too.”

This story was produced as part of the 2022 Climate Change Media Partnership, a journalism fellowship organized by Internews’ Earth Journalism Network and the Stanley Center for Peace and Security. It was first published by The Morning Context on 11 November 2022 and lightly edited for length and clarity.

Banner image: An event at COP27 / Credit: The Morning Context.

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