Carbon Footprint Tracking: Why Indian Businesses Need to Measure & Reduce Emissions
Climate change is one of the most pressing global challenges, and businesses play a crucial role in mitigating its impact. Indian industries contribute significantly to greenhouse gas (GHG) emissions, making it essential for businesses to monitor, manage and reduce their carbon footprint. With increasing regulatory pressures, investor scrutiny and consumer awareness, carbon footprint tracking has become a necessity rather than a choice.
Understanding Carbon Footprint
A carbon footprint refers to the total amount of GHG emissions generated directly or indirectly by an individual, organisation or product. These emissions are measured in terms of carbon dioxide equivalent (CO2e). Businesses can categorise their emissions into three scopes:
- Scope 1: Direct emissions from owned or controlled sources such as manufacturing plants, company vehicles and fuel combustion.
- Scope 2: Indirect emissions from purchased electricity, heating or cooling.
- Scope 3: Other indirect emissions from the supply chain, employee travel, product life cycle and waste disposal.
Why Indian Businesses Must Track Their Carbon Footprint
Regulatory Compliance
The Indian government has introduced various policies and frameworks to control emissions, including the Energy Conservation Act 2001, the Perform, Achieve & Trade (PAT) scheme and the Carbon Credit Trading Scheme (CCTS) under the Bureau of Energy Efficiency (BEE). The Securities and Exchange Board of India (SEBI) mandates ESG disclosures for the top 1,000 listed companies through Business Responsibility and Sustainability Reporting (BRSR). The Ministry of Environment, Forest and Climate Change (MoEFCC) has also implemented stricter norms for industries under the Environment Protection Act, 1986. Tracking carbon emissions ensures compliance with these regulations, helping businesses avoid legal risks and penalties.
Investor & Consumer Expectations
Sustainability is becoming a key factor in investment decisions. Institutional investors and international stakeholders prefer companies with strong environmental, social and governance (ESG) credentials. Consumers, especially younger generations, are also leaning towards brands that prioritise sustainability. Businesses that fail to measure and reduce their carbon footprint risk losing investor confidence and customer trust.
Cost Reduction & Operational Efficiency
Tracking carbon emissions helps identify inefficiencies in energy usage, transportation and waste management. By adopting cleaner technologies and optimising resources, businesses can significantly cut costs. Renewable energy integration, energy-efficient machinery and sustainable supply chain practices not only reduce emissions but also enhance long-term profitability.
Competitive Advantage & Brand Reputation
Companies that proactively address carbon emissions gain a competitive edge in domestic and international markets. Many global corporations require suppliers to adhere to sustainability standards, making carbon footprint reduction essential for Indian exporters. Additionally, businesses with strong environmental commitments attract eco-conscious customers and enhance their brand image.
Steps to Measure & Reduce Carbon Footprint
Conducting a Carbon Footprint Assessment
The first step is to measure emissions across all three scopes using standardised frameworks like the Greenhouse Gas (GHG) Protocol or ISO 14064. Businesses can use carbon accounting software or hire sustainability consultants to conduct a thorough assessment.
Setting Emission Reduction Targets
Once the baseline emissions are identified, businesses should set clear, science-based reduction targets. The Science Based Targets initiative (SBTi) provides guidelines for setting emission reduction goals aligned with global climate objectives.
Implementing Energy-Efficient Practices
Adopting energy-efficient equipment, upgrading to LED lighting, optimising HVAC systems and using smart sensors can significantly reduce energy consumption. Manufacturing industries can implement process automation to enhance efficiency.
Switching to Renewable Energy
Investing in solar, wind or bioenergy solutions helps businesses lower their reliance on fossil fuels. The Indian Renewable Energy Development Agency (IREDA) and state governments offer incentives and subsidies for renewable energy adoption, making it financially viable for companies to transition to cleaner energy sources.
Sustainable Supply Chain Management
Businesses should work closely with suppliers to ensure sustainability across the supply chain. Sourcing raw materials from eco-friendly suppliers, optimising transportation logistics and reducing packaging waste can significantly cut emissions.
Employee Engagement & Sustainable Workplace Practices
Encouraging employees to adopt sustainable practices, such as carpooling, remote working and minimising paper usage, contributes to overall emission reduction. Companies can introduce green initiatives and sustainability training programs to drive internal engagement.
Carbon Offsetting & Green Investments
For emissions that cannot be eliminated, businesses can invest in carbon offset programmes such as afforestation, renewable energy projects and carbon credits. Partnering with organisations that focus on environmental restoration can further contribute to sustainability goals.
Challenges in Carbon Footprint Tracking
Lack of Awareness & Technical Expertise
Many businesses, especially small and medium enterprises (SMEs), lack awareness about carbon footprint tracking and its benefits. Limited access to technical expertise and resources often hinders implementation.
High Initial Investment
While sustainability initiatives lead to long-term savings, the initial investment in energy-efficient technologies and carbon accounting tools can be a barrier for some businesses.
Data Collection & Accuracy
Accurately measuring emissions requires consistent data collection from various sources, which can be challenging. Businesses need to invest in reliable data management systems to track and report emissions effectively.
No Longer An Option
Carbon footprint tracking is no longer optional for Indian businesses. With rising regulatory expectations, investor preferences and consumer awareness, companies that fail to monitor and reduce emissions risk losing relevance in the evolving business landscape. By adopting sustainable practices, investing in clean energy and engaging stakeholders, businesses can contribute to climate action while enhancing profitability and resilience. The time to act is now—measuring and managing emissions is a crucial step towards a sustainable future for businesses and the planet.
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