India faces significant risks from climate change that could cost the nation over 10% of its national income and push 50 million people back into poverty by the end of this century. A recent report by the World Economic Forum argues for increased corporate investment in natural climate solutions to mitigate these impacts. The report emphasizes that while India’s top companies are committed to sustainability, their investments in natural climate solutions remain relatively modest.
Sectors such as forestry, agriculture, fisheries, aquaculture, and construction contribute around 33% of India’s GDP and are highly dependent on nature and directly threatened by climate change. The Indian government has set ambitious climate and sustainability targets, including a 45% reduction in emissions from 2005 levels and generating 50% of power from non-fossil fuels by 2030. However, the Climate Action Tracker (CAT) deems these efforts “highly insufficient” as of December 2023.
Corporate investment in climate targets
The World Economic Forum highlights the need for the private sector to significantly increase its contributions. About 57% of companies surveyed invest less than $1 million annually in natural climate solutions, while only 23% invest between $1 million and $5 million.
India must invest over $9 billion annually until 2030 in the forestry sector alone to meet its climate targets. Private sector contributions are crucial, with public spending averaging $1.75 billion annually. Corporate investment in natural climate solutions faces several barriers, including unclear regulatory frameworks, a lack of high-quality projects, uncertain returns, and limited financial incentives.
Companies call for more precise guidelines, better policies on carbon credits, collaboration with state governments, and project alignment with long-term sustainability goals. Seema Arora, Deputy Director General of the Confederation of Indian Industry, commented, “As businesses in India prepare to confront the multi-faceted challenges arising from biodiversity loss, ecosystem collapse, and natural resource shortages, it becomes crucial to address the emerging risks by enhancing investments in Natural Climate Solutions.
The white paper concludes by calling for cohesive public and private sector efforts to facilitate more significant investments in natural climate solutions, underscoring the high stakes for India in mitigating climate change and preserving nature.
