Most companies in India today are aware about climate change and its impact on their businesses. Although their perceptions about the nature of risks vary depending upon the sector and nature of business, most say taking measures to fight climate change is good for their reputation and about one-fourth of them say it enhances shareholders? value. These are key findings of the first fe-EVI Green Business Survey?2008.

The survey notes that companies have started viewing climate change risk as a strategic issue. While some companies are in favour of deploying clean technology, others are taking initiatives to qualify for carbon credits and trade in them. Companies admit they have more responsibility than the government in taking the lead, but they call for clear-cut government policies and incentives to enable them make a move, finds the survey by The Financial Express (FE) and EVI, a leading climate change mitigation advisory firm.

Conducted by AC Nielsen-ORG MARG, the surveyors interviewed CEOs, CIOs and other senior executives of 213 companies from the FE 500 list with the help of a structured questionnaire.

The questionnaire began by gauging the corporate awareness level about climate change. While 58% companies said they have deep understanding about climate change issues and international policies, rest said they have a fair understanding.

All of them are not undertaking complete measurement of greenhouse gases (GHG) emissions. GHGs cause human induced global warming. Although more than half of Indian companies (54%) said they measure their emissions either completely or partially, only 16% companies said they do it completely. More top 100-300 companies (30%) than top 100 companies and companies ranked beyond 300 measure their emissions completely. So, do MNCs.

It was followed up with questions to assess risk perceptions and business opportunities from climate change. More chemicals & fertiliser companies ((71%)) said they perceive physical risk. Similarly, 69% companies in the automotive sector said climate change presented regulatory risk to their businesses. Manufacturing sector companies (67%) and power sector companies (62%) apprehended the operational risk the most.

When asked to name the benefits accruing from managing climate change risks, companies said it is good for reputation and shareholder value. While 71% companies explained that better reputation among customers could be the biggest reward, 24% companies said managing climate change risks could increase their shareholders? value. In terms of ranking, 87% of top 100 companies said climate change management would result in better reputation among customers.

The surveyors followed up with questions to figure out their perception about business opportunit y arising out of climate change. While identifying the best opportunity, 66% companies said clean technology is the key to tackle the impact of climate change on their businesses and carbon market is a good opportunity to promote such technologies in India and 48% companies were in favour of green buildings.

Referring to pressures that drive initiatives to combat climate change, 51% companies said it comes most strongly from senior levels of management. Regulators and the government also have more role than other stakeholders.

Most companies said businesses should take more responsibility rather than depend upon the government to spur the development of clean technologies and set examples for others in the private sector. Sufficient incentives and favourable policies are needed to enable businesses to convert their plans into actions. Businesses that have taken voluntary initiatives were in favour of clear-cut policies to fight climate change.

The findings are expected to serve as a reference tool for tracking corporate India?s low-carbon journey. Besides the big picture, the survey also offers insight into details. The surveyors sought out companies that follow environment management practices that go beyond corporate social responsibility initiatives such as tree plantation and are engaged in improving their energy efficiency, water use efficiency, recycling, measurement of greenhouse gas emissions, carbon trading and clean technology deployment.

Mapping initiatives, cutting across businesses, sectors and geographical locations, the survey covered companies ranging from manufacturing to services, PSUs to MNCs, and top-100 companies to beyond top 300-500 companies. The maximum number of companies (20%) was from the manufacturing sector. Another 12% each were from the metals & cement and BFSI sectors. Companies from the real estate sector comprised 10% of the respondents. Others belonged to pharmaceuticals, services, automotives, oil, gas & mining, chemicals & fertilisers.

The surveyed companies included 69% Indian private companies, 17% multinational companies (MNCs) and 14% public sector undertakings (PSUs). The survey covered 17% of the top 100 companies, 21% top 100-300 companies and 62% top 300-500 companies, as per the FE 500 list.

In its way forward, the survey notes that there is no regulatory obligation on India to abate emissions as of now, but physical and operational risks and emerging opportunities make for a business case. So, it?s in the interest of businesses to act now. It can be done because India has a large and growing market and can make new technologies affordable by leveraging low-cost of manufacturing in the country. ?Indian businesses have a choice today. It?s between being a leader today or a follower tomorrow,? concludes the report.

Wake-up call

Awareness about climate change

• Deep understanding: 58

• Fair understanding: 38

Impact on business

• Very strong impact, requiring alteration of business plans: 37

• Moderate impact, manageable by redrawing their strategies: 37

Types of risks

• Operational risk: 57

• Regulatory risk 38

Benefits of risk management

• Better reputation among customers: 71

• Increase in shareholders? value: 24

Business opportunities

• Clean technology: 66

• Green buildings: 48

(Figures in % refer to companies surveyed)