Assessing corporate response to climate change: evidence from India

This paper aims to understand the reported awareness and response of Indian corporates to climate change and explores how and why the approaches vary with ownership and industry types. The paper also evaluates whether companies' financial and climate performances are correlated.

The authors collected data from the sustainability/integrated reports, websites and carbon disclosure project (CDP) responses of top-60 companies from the 2019 Fortune India 500 list against 52 indicators designed for the purpose. Descriptive statistics, ANOVA analyses, exploratory factor analysis (EFA) and linear correlations of climate responses with annual revenue and profitability were carried out.

Private sector firms outperform public sector companies, and manufacturing industries surpass services industries. Organizations disclosing to CDP and detailing United Nations Sustainable Development Goals (UN SDGs) and SDG-13 in their reports score significantly higher (at 5%) than their counterparts. The number of positive responses is positively correlated to the revenue and profitability of the companies. EFA indicated the presence of two underlying factors responsible for the observed variances.

Businesses constitute an essential driver of growth in large economies and hence are critical for addressing the issue of climate change. The study underlines the role played by the private sector in mitigating climate change and its impacts.

This is among the first studies that comprehensively evaluate the climate responses of Indian corporates. The current study is also among the foremost studies in the Indian context that identify the underlying factors behind the observed variances and explore correlations between financial and climate performances.