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RBI to Establish Data Repository for Climate Change Risk

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RBI is stepping up its green initiatives.

The Reserve Bank of India (RBI) has plans to establish a data repository for climate change risk.

“Climate change is emerging as a significant risk to the financial system world over. This makes it necessary for regulated entities to undertake robust climate risk assessment, which is sometimes hindered by gaps in high-quality climate-related data. To bridge these data gaps, the Reserve Bank proposes to create a data repository, the Reserve Bank – Climate Risk Information System (RB-CRIS),” said Shaktikanta Das, Governor, RBI.

The portal will be available in two sections, to fill in the gaps in the fragmented data that is currently available on climate.

The first component will be a publicly accessible Web-based directory on the RBI website that lists a variety of data sources, including meteorological and geographic data.

A data portal containing datasets (processed data in standardized formats) will make up the second section. Mr Das said that only regulated entities would have phased access to this data portal.

“It is crucial for regulated entities to undertake climate risk assessments for ensuring stability of their balance sheets and that of the financial system. Such an assessment requires, among other things, high quality data relating to local climate scenarios, climate forecasts, and emissions,” he said.

The Green Backdrop:

It must be noted that the RBI published the guidelines for accepting green deposits from regulated businesses in April 2023. As per the guidelines, the goal was to support and expand the nation’s green financial ecosystem.

According to the framework, regulated businesses can provide green deposits to clients, safeguard depositors’ interests, assist clients in achieving their sustainability goals, resolve concerns about greenwashing, and support the expansion of credit available for green initiatives.

Michael Patra, Deputy Governor, RBI, had in June 2024 asserted that the bank was considering offering green deposit coverage.

He said, “We are exploring appropriate coverage for green deposits, climate-risk based differential premiums and funding needs for climate sustainability.”

RB-CRIS follows the discovery that climate change poses a serious global risk to the financial system. The goal of this project is to improve climate risk assessments by offering standardized, high-quality data, Mr Das said.


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Will the 17th LS Election Emit Less Carbon Footprint?

Sonal Desai


In the next three months, India’s 16th Prime Minister will take oath. India, the world’s largest democracy, is heading to a general election and is also setting a tone change—this time regarding carbon emissions.

Amid the hustle and bustle surrounding the election campaign and related propaganda that will now amuse us every day, I will keenly follow the speeches of the key contestants.

I do not doubt that the economy, people, employment, education, agriculture, infrastructure, and better livelihoods will be the main topics of conversation. I’ve noticed that very few candidates discuss the green initiatives, even as each one provides a report card.

While all these segments are important for the development of a country and its citizens, climate change and climate action, sustainability and green initiatives are equally significant if we want to actively engage the next generation in politics. Sadly, GREEN hasn’t appeared on any agendas so far!

I’m concentrating especially on millennials because they have the freedom to choose to participate in politics or not at all. In addition to roti, kapda, makaan, and padhaii, insaan is becoming more and more popular.

This generation refuses to work for companies that do not have an appropriate ESG policy in place. They are not willing to compromise on sustainability or sustainable workforces! Approximately 2 percent of the voter base, or 1.82 crore people, will be first-time voters from this generation.

It looks like the LS 2024 Election may just be carbon-positive. Rajiv Kumar, Chief Election Commissioner, has set the green ball rolling.

Even as everyone in the nation gets ready to press the EVS, the CEC’s recognition of the significance of carbon footprint may perhaps be a first in the LS polls’ history.

The CEC urged all political parties to go paperless, saying, “It is important to check the carbon footprint and to use as little paper as possible.”

He stressed the importance of holding ecologically friendly elections. He instructed the political parties and the polling apparatus to work with waste management facilities, utilize double-sided printing, carpool and take public transportation, and refrain from using single-use plastic.

Sadly, the political commentary of the CEC’s decision to hold the LS elections in seven phases and, in some states, the Assembly elections concurrently, has already started. I am yet to hear from any political party welcoming the EC’s move and making a commitment toward reducing carbon footprint during their campaigns.

How many SDGs are the elections violating?

Trivia:
  • The use of microplastics in campaign literature and fossil fuels during traditional election campaigns has a significant carbon footprint.
  • Electronic voting machines significantly reduce paper usage in elections, saving 10,000 tons of ballots and over 20 lac trees in an Indian national election, thereby promoting environmental sustainability.
  • EVM offers superior benefits in ballot paper printing, storage, transportation, and labor costs, as it reduces the cost of hand-carrying ballot papers.
  • India’s greenhouse gas emissions have nearly tripled since 2000, reaching a record high of 2.7 GtCO2 in 2022, indicating a significant environmental crisis.

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Indian Railways, CII Renew MoU for Green Initiatives

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The Indian Railways (IR) and the Confederation for Indian Industries (CII) have renewed a MoU to promote green initiatives.

The updated Memorandum of Understanding aims to cut greenhouse gas emissions and the amount of energy and water used for sustainable transportation. The IR will be able to achieve its 2030 goal of net zero carbon emissions due to this initiative.

Technology collaboration is one of the new initiatives covered by this Memorandum. CII will find new technologies, facilitate their application, and help workshops and production units become certified ISO 50001 facilities. Additionally, it will help IR create the information dashboard and station frameworks for the Net-Zero Energy Railway.

The CII-IR collaboration began in July 2014. Every three years, the two parties renewed their Memorandum of Understanding.

Here is a look at the progress so far:
  1. Energy efficiency in manufacturing facilities and railway workshops:

Energy savings of 210 lakh kWh
Monetary savings of Rs 16 crore
GHG emissions reduction of around 18000 tons of CO2

2. Green co rating: This initiative has been implemented in 75 railway units (workshops & manufacturing facilities) to improve IR’s environmental performance.

3. Green railway stations: Around 40 stations have achieved green certificates.

Saved 22 million KWh energy and
3 billion liters of water annually

4. Green buildings, hospitals, schools, and colonies: Over 40 building facilities, including administrative buildings, hospitals, schools, and colonies have been facilitated to achieve green certification.

5. Capacity building and skill development:

On-boarded more than 20 new technology suppliers
Around 150 IR officials were exposed to the 6 best energy-efficient private sector plants in India
Around 900 IR officials trained on different aspects of energy efficiency

Quotes:

Jaya Varma Sinha, Chairman & Chief Executive Officer, Railway Board, said, “Indian Railways has consistently demonstrated its commitment to sustainable practices.”

Seema Arora, Deputy Director General, CII, said, “Our renewed partnership with Indian Railways signifies a strategic shift towards the Net Zero framework. This alignment with global sustainability goals underscores our dedication to creating a greener, cleaner, and more sustainable future for generations to come. We look forward to implementing cutting-edge solutions that will pave the way for a more environmentally responsible railway network.”


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Indian diamond company pledges net zero emission by 2024

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Shree Ramkrishna Exports Pvt Ltd (SRK), a global natural diamond crafting and exports company has set a target to achieve net zero emissions for both of its diamond crafting facilities – SRK Empire and SRK House, by 2024.

The company has partnered with The Global Network for Zero (GNFZ), an international leadership collective, for the project.

SRK’s green initiatives include an off-site 6 MW solar power plant, wastepaper recycling, daily waste monitoring and reduction, a facility for generating compost and cooking fuel, and a sewage treatment plant for water recycling.

“As a purpose driven company, we believe our commitment to quality and to society and the environment are of the utmost importance,” said Govind Dholakia, Founder & Chairman of SRK.

SRK tracks its operational performance in energy, water, waste, transportation and occupant experience at both the diamond crafting facilities. Both the buildings are amongst the highest-ranking green buildings globally, the company said in a press release.


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Sebi expands ESG to six new mutual funds schemes

Sonal Desai


The mutual fund industry in India is all set to embrace more green initiatives.

The Securities and Exchange Board of India (Sebi), the market regulator, has issued a circular introducing a new category of mutual fund schemes for Environmental, Social, and Governance (ESG) investing. These schemes fall under a distinct subcategory within the thematic category of equity schemes.

Sebi has taken definitive steps to promote green finance. Additionally, Sebi hopes to reduce the risks of mis-selling and greenwashing in MFs as part of the initiative.

“… it is decided to introduce a separate sub-category for ESG investments under the thematic category of Equity schemes. Any scheme under the ESG category shall be launched with one of the following strategies – a. Exclusion, b. Integration, c. Best-in-class & Positive Screening, d. Impact investing, e. Sustainable objectives, f. Transition or transition related investments,” the regulator said.

The strategies:
Exclusion strategies involve excluding securities based on ESG-related operations, corporate strategies, or industry verticals. Integration involves considering both traditional financial and ESG factors in investment decisions. Best-in-class and positive screening involves investing in businesses outperforming peers on ESG-related performance metrics. Fund managers should assess environmental, social, and governance issues, manage them, and invest in sectors with long-term ESG trends for sustainable objectives. Supporting environmental transition companies generates positive social and environmental impacts.

What is mandatory?
Sebi mandates 80% of ESG schemes’ assets under management to invest in equity and equity-related instruments, and 65% in companies with BRSR disclosures. Investment criteria apply from October 1, 2024, with a one-year grace period for non-compliant schemes.

The circular emphasizes enhanced disclosure requirements, including scheme strategy, ESG scores, voting, and annual fund manager commentary. It also calls for independent assurance and certification by AMCs to ensure regulatory compliance and independent assurance on ESG scheme portfolios.

The disclosures:
Sebi also outlined some disclosure requirements for the ESG schemes. Mutual funds must clearly disclose the following:
1. Name of ESG strategy in the name of the concerned ESG fund/scheme
ii. Security wise BRSR Core scores along with the BRSR scores in their monthly portfolio statements of ESG schemes
iii. The name of the ERPs providing ESG scores for the ESG schemes, along with the ESG scores.

The market:
Rating agency Crisil predicts India’s mutual fund industry assets could reach Rs 50 lakh crore by 2025, up from Rs 30 lakh crore in November 2020. It believes independent research and analytics will be crucial. A CRISIL Research analysis revealed that a significant portion of funds are in companies with good ESG scores, with exposure to ‘Leadership’, ‘Strong’, and ‘Adequate’ categories at Rs 2.29 lakh crore, Rs 5.22 lakh crore, and Rs 6.46 lakh crore, respectively.


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