It would have been hard to believe if someone would have said a decade ago that crude oil firms, the ones that sit on piles of invaluable crude oil, would be investing in solar or renewable businesses
While this switch from traditional energy sources to renewable is global, India too has seen its fair share of sustainable moves. For example, Reliance, the Indian oil conglomerate, announced in its AGM held in 2021 that the company would invest close Rs. 75,000 cr in clean energy and will be building four Giga factories.
Not just announcement, but the company soon acted upon it and acquired REC Solar Holdings AS (REC group) from China National Bluestar (Group) Co. Ltd at an enterprise value of $771 million and another 40% stake in Sterling & Wilson Solar Ltd, a Shapoorji Pallonji Group (SP Group) company, for about ₹2,845 crores.
Such has been the turn of times in the last few years that the investor community has been in the driver’s seat in forcing corporations and businesses to take “Green Decisions” ending the notion that sustainability is a fad.
Startups paint them Green too
Green. business has seen such strong investment flows that it has changed the complete investment narrative more towards climate change solutions. This has been well aided by a favourable regulatory landscape and the availability of scalable climate ventures.
Climate and Physical Risk Call For Urgency: Regulations and Stakeholders Activism
While there has been a strong push of funding the business environment and all stakeholders are now creating pressures on businesses to act on climate change. Early this year, two large oil majors lost their battle against climate change activism. A Dutch court ordered Shell to expedite the reduction in its greenhouse gas emissions to 2030 as against 2050, and ExxonMobil faced protest from climate activist shareholders over its failure to set a strategy for a low-carbon future.
And this is not again global closer home, State Bank of India’s decision to invest its green bonds’ proceeds in the Carmichael thermal coal mine in Australia has attracted a lot of flak from its international investors.
Aiding to this also is the evolving regulatory space. While it has been a nascent step, but SEBI has beefed up the disclosure measure regarding ESG compliance especially covering aspects such as resource usage (energy and water). SEBI recently revised its Business Responsibility and Sustainability Reporting (BRSR) framework, requiring the top thousand listed entities by market capitalisation to provide environment-related disclosures. These are expected to boost demand for a set of green companies that provide energy and water efficiency solutions.