Nifty 500 responsible for 45% of India’s carbon emissions: Analysis

The NSE 500 index, comprising the leading 500 publicly listed companies in India, collectively produced an emissions footprint of 1.78 billion tonnes (Bt) of carbon dioxide equivalent (CO₂e) in the fiscal year 2022-23, around 45% of country's total emissions, according to an analysis.

The World Bank’s estimates indicate that India’s total GHG emissions reached 3.9 Bt CO₂e in 2021. Even considering an increase in India’s total emissions between 2021 and 2023, it is obvious that a significant share comes from the corporate sector, found the analysis by Devana Varshith, Team Lead at the Foundation for Democratic Reforms (FDR), a public policy think tank.

The Nifty 500 companies can be broadly categorised into two sectors–the manufacturing and services sectors. Out of these, 60% are from the manufacturing sector, and 40% are from the services sector.

“However, as a share of emissions of the Nifty 500 companies, the manufacturing sector stands at 97.8%, while the service sector stands at just 2.2%. Industries with the highest emissions within the manufacturing sector are power, oil and gas, cement, iron, metals, and automobiles,” finds the analysis.

The disproportional contribution of the manufacturing sector towards emissions is because the emissions from these industries are ‘hard to abate,’ as the nature of the processes is inherently energy intensive.

An organisation-level analysis of the reporting by Nifty 500 companies provides interesting insights. In the year 2022-2023, 415 out of the 500 companies accounted for their scope 1 and scope 2 emissions. However, only 140 companies reported their scope 3 emissions.

Scope 1 emissions are direct emissions such as from boilers or furnaces used in the manufacturing process. Scope 2 emissions are indirect emissions resulting from the use of electricity purchased from the grid. Scope 3 emissions include all other indirect emissions that occur due to the organization’s upstream or downstream activities.

“This is an important observation as it suggests that while a large majority of the Nifty 500 companies have begun accounting for their emissions, they face challenges in collecting data on emissions across their value chain,” it added.

The possible reasons for this gap include the large number of suppliers and distributors who do not collect or maintain emissions data, as well as limited engagement with Small and Medium Enterprises (SMEs) that often lack proper record-keeping systems

“It is encouraging that, as of 2023, more than 114 companies within the Nifty 500 have set net-zero targets before 2050, and many more are expected to follow. Corporate companies are increasingly adopting global standards and benchmarks for reducing emissions,” it added.