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Navigating the Hard-to-Abate Cement Industry with Dalmia Cement Bharat Ltd

Dalmia Cement Bharat Ltd

Cement, the world’s second most consumed product, plays a vital role in civilization due to its integral use in concrete production. However, its environmental impact is substantial, contributing significantly to global carbon emissions, around 7%. Achieving global net-zero emissions by 2050 requires urgent decarbonization of the cement and concrete industry. In India, as urbanization and industrialization expand, the demand for cement and related products increases, resulting in higher carbon emissions. Cement and steel together constitute 15-20% of India’s total emissions, making them challenging sectors to decarbonize, crucial for reaching the nation’s net-zero goal by 2070. Addressing cement production emissions is imperative for various reasons.

In an interaction with Dr Arvind Bodhankar, Head of ESG and Chief Risk Officer, Dalmia Cement Bharat Limited, we explored the complexities the cement industry faces today and how Dalmia Cement Bharat is navigating them.

Question 1:  What are the different sustainability initiatives being undertaken by Dalmia Bharat Cement and how are they aligned with the overall business strategy?

Growth Plans

We are one of the leading cement producers in India. We currently have 43.7 million tonnes installed capacity and we plan to reach 210 million tonnes by 2030. But merely growing volumes and making a profit is not good business sense for us. That’s what we believe. We believe that business should grow, but it should include people and the planet, and that is why whenever we decide on our business strategy, we look at it through the lens of sustainability.

We ensure that every strategy has sustainability integrated with it. For example, while we want to grow volumes, what clinker percentage should we have, we have already decided. We have considered how much carbon emissions per tonne of cement we should have. So, the road map is very much there.

Sustainability Initiatives

For the cement industry, carbon emission is one of the major issues and globally the cement industry is seen as an offender as it contributes almost 7 per cent to the carbon pool. And all of us know that carbon contributes a lot to the climate change phenomenon. So, there is pressure on the cement industry to cut down on carbon emissions and that is in our minds too.

In 2018, we took a pledge that we would be carbon negative by 2040; not carbon neutral not carbon zero, but carbon negative. That means we will not only cut down our carbon emissions by 100 per cent but also solve some other emissions. That’s the biggest commitment. Since 2018, when we committed, we have already achieved a 15 per cent reduction, almost more than 3 per cent year on year.

We have also committed to the Science Based Target Initiative (SBTi) and the trajectory which we have shown surpasses the milestones. With this pace, we are going to meet our targets. When we set our target in 2018, people were laughing at us. Cement is a hard-to-abate sector. In the cement industry, 50 to 60 per cent of emissions are happening through the process, of limestone and calcium carbonate, which we use.

Typically, for other businesses it is because of the fuel which is being used. For us, it is the fuel and the raw materials used. No other heavy manufacturing company, globally, has taken this target; we are the first ones to commit at the United Nations platform in New York where our Managing Director and Chief Executive Officer made this declaration.

So far, we are on track. This was possible because of the various initiatives and levers. When we made this commitment, we did not know all the answers: how are we going to achieve the targets, but our promoters and Managing Director felt we must make a commitment and as we move forward we will find the answers and that is what is happening today. We may not have 100 per cent answers today, but at least 70 to 75 per cent answers we have found and that is a major achievement. But carbon is not the only thing for us. We are focusing on complete ESG.

Carbon is the environment and within the environment also we have a biodiversity plan. On the water side, we are almost 14 times water positive. On the waste side, we are waste-positive and are helping other industries and municipalities by asking them to send their waste to us and we would consume it. We consume almost 7 million tonnes of waste from other industries. And 29 per cent of our energy consumed comes from renewable sources.

On the social side, we are working on identifying how can we have a sustainable lifestyle for our communities. We have sustainable livelihood plans put in place. We have a definition of sustainable livelihood which could differ from others. For us, sustainable livelihood means if kids are just passing out from school, we ensure that we provide adequate and right kind of skills so that they become employable. We have also formed women’s self-help groups and provided them with financial support so that they can be independent and build a livelihood for themselves. We want to ensure that everybody in our vicinity, has the means for a sustainable livelihood for themselves.

We aim to have close to 1 million beneficiaries by 2030. On the community side, water conservation, sustainable agriculture, and skill development initiatives are also being undertaken. Governance is a given and compliance is a bare minimum for us. We adhere to all the regulations, and we are trying to be more compliant.

Question 2: What are the roadblocks have you encountered while implementing initiatives and how did you overcome them?

A journey is never smooth. When we talk about challenges, we talk about material issues or significant issues. When we started initially, we did not know the answer to achieving net zero or carbon negativity. In the cement industry, you require the right technology, technological support, policy support, and funding.

Also, there is pressure on the cement industry on the price because cement goes into development, affordable housing, etc. So, there is pressure on price because you cannot increase the price to absorb all costs. For the initiatives taken, the cost is borne by us and the 15 per cent reduction in carbon emissions has been done through internal accruals without transferring the burden to the consumers. On average, if the global numbers are right USD 125 are required for abating one tonne of carbon. So, you can imagine the expenditure we have made and all through internal accruals. Funding was, is, and will always be a challenge.

Policy support is required whether it is regarding the availability of green fuel, availability of biomass, or round-the-clock availability of renewable energy.  The government is proactive and has committed that by 2070, India should achieve carbon net zero. Policies are coming up, but not at the pace at which it should be. After G20, we can see a lot of push is going to be there and there will be the right kind of support available.

Carbon capture and utilisation will be an important technology for our industry. Unfortunately, that technology is not available in India, so we have to be dependent on the developed world. Innovation that needs to be happening in our country is not happening at the pace at which it should. Startups are coming up, but we need to encourage startups for innovation so that technology is available indigenously and we don’t have to be dependent on the developed world.

Question 3: Dalmia Bharat is one of the companies with the lowest carbon footprint in the world and it is 14 times water positive. So, what steps has Dalmia Bharat taken to ensure it maintains its position and how have you achieved water positivity?

To maintain and further lower the footprint, we need to keep 3 to 4 initiatives in mind: keep the clinker factor as low as possible, use renewable energy as much as possible, and have more green fuel by replacing coal with municipal waste, biomass, and green material. As far as water positivity is concerned, we have created catchment areas within our plants as well as a community area and the rainwater is being channelized to ensure the groundwater level is increasing. We have created ponds and reservoirs where this water, which otherwise would have flown away, is stored. We have created check dams and that is how the water table beneath the earth is increasing.

Question 4: What practices and strategies has Dalmia Bharat implemented when we talk about responsible sourcing and how have you been able to maintain the supply chain sustainability?

What we believe is you cannot be sustainable within your four walls. Your upstream supply chain and downstream supply chain must be sustainable. We believe in a holistic approach: ‘whole life, whole value chain’. And with that mindset as a first step, we have integrated our key suppliers into our sustainability ESG management program. The program is not very old, it was launched just about a year back. In Phase I, we have done an 80-20 analysis and for suppliers who have 80 per cent expenditure, we have decided on a cut-off point or filter.

We have created a supplier sustainability code in consultation with the non-substitutable suppliers and floated it to all the shortlisted suppliers and asked them to respond to the codes. Based on this, we have evaluated the suppliers and created a mass code. Thereafter, depending upon the capacity, whether it is a Micro, Small, Medium Enterprise (MSME) or large sector supplier, we will be providing a timeline by which they need to meet the supplier expectations we have created. For that whatever handholding is required like capacity building, technical support, or training, we will provide and ensure that all of them meet our expectations in 3 years.

New suppliers coming on board will be required to meet our expectations. It is one of the deciding factors, so that is how the supply chain sustainability program has been rolled out. In Phase II, we will do the same thing for our dealers and people further down the supply chain.

Question 5: One of the sustainable development goals talks about collaboration with different organizations. How is Dalmia Bharat collaborating with other organizations and what has been the impact of collaboration on the society and overall, on Dalmia Bharat?

We have been on the trade associations and have been playing a role whether it is the Global Cement and Concrete Association (GCCA) or any other cement-related association. In some of the cases, we are the founder members and in some cases, we are sitting on the governing board. We are bringing together all the cement producers and sharing knowledge and best practices. We are also learning from them. Collectively, we want to improve the entire cement industry and that is what the thought process of our CEO is also.

We should not be selfish and look only at what Dalmia Bharat is doing. We would like to have the entire Indian and global cement industry come together and that is why we are a part of the global dialogue. Our Managing Director sits on the board of the GCCA and I sit on the India GCCA board. Our efforts have been to continuously collaborate with the industry. We are also very active in the Federation of Indian Chambers of Commerce & Industry (FICCI), Confederation of Indian Industry (CII), and similar organizations.

We are closely working with The Energy Resource Institute (TERI) to build a cement sustainability road map or net zero road map. We are the founding members of First Movers Coalition, which is a global initiative for creating demand for sustainable products.

Question 6: Moving to the world inside of Dalmia Bharat, how is sustainability integrated with the DNA of Dalmia Bharat given the fundamental pillars and how do you encourage employees to adopt sustainable lifestyles inside and outside of the organization?

In many organizations, sustainability is something which is supposed to be done by the corporate office sitting in Delhi or in Mumbai. If you go to the plant and question an employee on the field “What your understanding of sustainability or ESG is?”, perhaps they will say that we do publish a report and that is being done by the team sitting in the corporate office. That is what the understanding of the people at the ground level is, but that is not the correct thing.

At Dalmia Bharat, we have recognized this fact and set that unless every employee at the shop floor level has an understanding of ESG, we can’t drive this agenda. That is why we have created sustainability cells at the plant or unit levels where people are participating.  We are organising ESG weeks where the intense participation of the employees can be seen. We have a suggestion scheme where we engage with people. These are few formal ways of engaging with employees, but there are lots of other informal ways. For sustainability, employee engagement is imperative and we have been carrying out several steps to ensure that.

Dr. Arvind BodhankarQuestion 7: Dalmia Bharat’s business philosophy is, ‘Clean and green is profitable and sustainable’. What is your mantra for sustainability?

Sustainability is common sense. You do not have to do anything different, whatever is right you do that. Keep people and the planet in your mind in whatever you are doing. For example, if you are drinking water and leaving half of the glass unconsumed, what burden is it creating on society and the planet? Just keep that in mind. It will be difficult initially, but in the long run, you will find that we are creating a sustainable world.


Navigating the Hard-to-Abate Cement Industry with Dalmia Cement Bharat Ltd

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