As many as 16 Indian companies, including IT bigwigs Infosys and TCS, have expressed worries about the risks of climate change to their businesses in the next five years, according to a report.
As many as 16 Indian companies, including IT bigwigs Infosys and TCS, have expressed worries about the risks of climate change to their businesses in the next five years, according to a report. The 16 Indian companies are in various sectors like banking, cement, IT, consumer goods, automobiles, electric utility, mining, gas processing and distribution, business and financial services and textiles, the report by global forum Carbon Disclosure Project (CDP) stated.
“As climate change threats are on the rise, risks to businesses are also correspondingly increasing. A group of world’s biggest companies representing nearly 17 trillion US Dollars (USD) in market capitalization have valued the climate risks to their businesses at almost 1 trillion USD – with many likely to hit within the next five years,” the report said.
The CDP is a global disclosure system that enables companies, cities, states and regions to measure and manage their environmental impacts. It collects and collates self-reported environmental data in the world.
The data was collected by the CDP and compiled into a report after over 200 global companies, including 16 Indian businesses responded to its questionnaire and shared threats to their business due to water scarcity.
The Indian companies are – Infosys Ltd, Tata Consultancy Services(TCS), GAIL, Axis Bank, Kotak Mahindra Bank, State Bank of India, Mahindra and Mahindra Financial Services, Hindustan Zinc, Indian Hotels Co. Ltd, Shree Cement, Tata Chemicals, Tata Global Beverages, Tata Motors, Tata Power Co, Wipro and Arvind Ltd, a textile company.
Infosys and TCS expressed concern over their workforce and operations being affected due to climate change and the changes in the availability of natural resources like water in regions where they operate.
“A significant proportion of our workforce is based out of offices in coastal cities like Mumbai, Chennai and Kolkata which have high exposure to extreme weather events like precipitation, cyclones, rise in sea level, etc,” the report said quoting TCS.
According to the report, banks and financial institutions lend money to a myriad of industries that face direct climate risks such as increased instances of natural disasters, depletion of water resources and impact on human capital.
It said that Axis Bank is a lender to the agricultural sector, which has a high risk of crop failures or disruptions in production due to floods, droughts, cyclones and other natural disasters.
“The disasters affect the production capacity and ability of industries lying in their wake. The Bank is a significant lender to all such sectors, and thus these risks also impact its own portfolio,” it said.
SBI, which also has a significant agricultural portfolio, told the CDP that the negative effect of climate change and increased probability of droughts will adversely affect loans to be paid back in time, thereby leaving it susceptible to credit risk.
Gas processing and distribution company GAIL is also at the risk of being hit by climate change as its major compressor station and pipeline installation is located near the sea and is highly vulnerable to get adversely impacted due to rising sea levels.
“Rising sea levels would for certain impact our coastal facilities and can lead to even closure of operations in the worst case. Even higher probability occurrence is likely floods due to storm surges becoming more frequent,” the report said quoting GAIL.
Hindustan Zinc, the mining company said it has three smelters and five mines located in Rajasthan, so change in the precipitation level is one of the major risk areas for it.
“Change in precipitation level further intensifies the problem as our operations in mining and smelter industry are heavily dependent on water availability. If there is less rainfall in these areas in future, it may affect our operations and productivity due to inadequate supply of water leading to a direct impact on company’s revenue.”