New business climate

Indian companies are beginning to discover that green business is great business, a recent survey shows. Labonita Ghosh reports

Life-defining moments are hard to forget. Ganesh Samant, managing director of Abhitech Energycon, says his epiphany happened in 1995, when he was still an Mtech student in Mumbai.

“We had some visitors at college, and one of them, an industrialist, said to us: Remember, the next big opportunity for India will come from IT and the environment,” says Samant.

Years later, when Samant started business, he headed the environment way. In collaboration with IIT Bombay, he now produces fuel additives which might reduce carbon emissions by 3-4 per cent while making automobiles 2-3 per cent more fuel efficient.

“I started when carbon trading was not big. Now every company wants a part of it,” he says. Indeed, a Confederation of Indian Industry (CII) and Worldwide Fund for Nature (WWF) report on carbon disclosure among 110 Indian companies shows that 85 per cent of the respondents “perceive commercial opportunities around climate change”.

These arise from greenhouse gas emission caps being set on companies, which will have to buy carbon credits under a UN protocol if they exceed these caps. Companies which reduce emissions, on the other hand, can sell carbon credits.

According to the CII’s green business centre, new opportunities range from producing energy-efficient equipment and materials to R&D in clean technologies and providing green services in the form of energy auditing, ratings, and consultancy about Clean Development Mechanisms.

And the players in this segment include architects, engineers, CDM-facilitators, auditors, manufacturers, financial institutions, venture capitalists, etc.

“The financial sector is getting into this now,” says Seema Arora, head of the CII’s sustainable development department.

“Initially they did not understand the liability of backing projects that do not adapt to climate change. But after Hurricane Katrina, where the insurance and financial sectors lost money, many of them are coming forward to be a part of this process.”

Many organisations and consultancies are now either applying themselves exclusively to green work, or creating in-house departments to take care of it.

At PriceWaterhouseCooper (PwC), says executive director Bharti Gupta-Ramola, sustainability efforts began in 2002, but by 2005, “even smaller companies were approaching us for carbon inventorisation and auditing, and advice on how to implement CDMs.”

Globally, the consultancy has over 500 employees in its green divisions; in India, it plans to have a dedicated 30-member team.

Others like Ernst&Young have also created new teams, in-house trained, as their carbon assessment responsibilities grew. In November 2005, a surge of carbon credits brought India its first (and so far, only) carbon exchange, called the Asia Carbon Exchange, based in Singapore because rules for carbon trading are still fuzzy in India.

This online market brokers transactions between people who have registered CDM projects, and those who want to buy them. They buy and sell reduction in emissions, says Shantanu Kashyap of the Asia Carbon Exchange.

“And now we are looking at carbon retailing, a process by which even individuals can measure emissions they are responsible for, like when they fly, drive or use their gadgets, and trade them in for carbon credits,” he says.

“We want to make each individual a part of the carbon market.”

This is just the beginning, predicts Arora. The biggest opportunities lie in construction and infrastructure building which has a large carbon footprint, and is begging for innovative alternatives.

“This is followed by opportunities in the auto sector, for lighter, smarter, more fuel-efficient cars.”

According to Vinod Kala, director of Emergent Ventures India, a firm that started out as a ‘management incubator’ but switched to CDM-related activities in 2000, renewable energy — harnessing energy from thermal, hydro, wind or any other, hitherto-untapped sources — is waiting to be fully exploited.

“The environment will become the biggest driver of all business around the world,” he says.

Industry estimates say by 2010, the potential for green building materials would touch $4,000 million in India.

For renewable energy, it could be $20 billion, and investment potential in energy efficiency could be $5,000 million.

At any given time, adds Kala, there is a worldwide corpus of between $10-15bn that banks and private institutions are looking to invest in green ventures.

As of now, India generates about 20 per cent of carbon credits globally, with about 30 per cent of projects worldwide, which are poised to increase. But experts advise looking beyond carbon.

“Companies tend to concentrate only on a CDM agenda, and not a more comprehensive response to climate change,” says Arora. “We have to look at where else we can improve energy efficiency.”