ICRA’s latest report highlights a significant shift toward renewable energy in India’s power sector but underscores the need for more commitment from high-emission industries to meet net-zero goals

A report by ICRA ESG Ratings has revealed that less than 10 per cent of Indian companies committed to net-zero targets belong to high-emission sectors such as power, cement, and mining. The study, which focuses on companies adhering to the Science-Based Targets Initiative (SBTi), found that most of the 127 Indian companies with net-zero commitments are from low to medium-carbon sectors like textiles, software, and pharmaceuticals.

SBTi is a voluntary framework where companies set science-based emission reduction targets, which are independently assessed and validated. India ranks sixth globally in the number of companies committed to the SBTi net-zero targets, yet a significant gap remains in high-emission sectors, which account for about 55 per cent of the nation’s total emissions. These sectors, particularly energy and cement, have been slow in aligning with global climate goals.

ICRA’s findings show that the shift toward renewable energy in the power sector is gaining traction, with companies like Adani Energy Solutions and Tata Power making strides in reducing emissions. However, coal-based power generation still predominates for most companies. Similarly, the cement industry, which is a major emitter due to clinker production, is addressing its emissions through alternative fuels and carbon capture technologies.

The report underscores that despite some progress, only a small number of corporates in the power, energy, cement, and mining sectors have committed to reducing emissions. While companies in these sectors may have internal goals, fewer are aligning with the SBTi, which could hinder India’s ability to achieve its broader net-zero goals by 2070.

Sheetal Sharad, Chief Ratings Officer at ICRA ESG Ratings, noted, “The lack of comprehensive commitment from high-emission industries indicates that while progress is being made, it may not be enough to meet net-zero targets. Greater regulatory support and innovation are needed to accelerate the transition in these sectors.”

The report also highlighted global trends, revealing that Europe leads the way in corporate net-zero commitments, followed by Asia and North America. Interestingly, China, despite being the largest emitter globally, has a relatively low number of companies committed to net-zero targets.

In conclusion, while India has made strides toward net-zero, the report calls for more comprehensive and sector-wide engagement, especially from high-emission industries, to align with global climate commitments and meet the 2070 target.