How Corporates are Stealthily Driving India’s Climate Transition: Insights from a Researcher’s Perspective

Almost daily, we encounter news about climate change. But how many of us truly understand its significant risks—not just to our planet but also to our economies? Climate change isn’t just an environmental concern; it’s becoming a major financial issue. Opinions on this vary greatly among leaders, investors, and corporate managers.

Climate Risks and Business Implications

A 2021 survey by NYU Stern School of Business revealed a striking difference in views about climate risk. Out of 861 finance professionals, 73% felt these risks were undervalued in financial markets. In contrast, only 51% of academics shared this view. This gap highlights a key challenge: the financial market hasn’t fully recognized the impact of climate change.

So, how are climate issues related to finance? Beyond issues like floods and droughts, there are major policy trends at play. For example, India has committed to the United Nations’ Sustainable Development Goals (SDGs). One notable commitment is to source 50% of its electricity from renewable sources by 2030. These pledges force companies to comply with stricter regulations and disclose detailed information about their emissions and energy use.

Take the Business Responsibility and Sustainability Reporting (BRSR) framework in India. It requires large companies to provide clear data on their sustainability practices. Today, addressing climate risk is becoming a necessity for businesses, not just a part of corporate social responsibility.

The call for accountability doesn’t just come from regulators; investors and consumers are also demanding action. The rise in sustainable investing shows that businesses ignoring these trends might face financial repercussions.

The Dual Risks of Climate Change

Companies now face two types of risks: transition risk from moving towards greener practices and physical risk from climate-related disasters. These risks are reshaping how companies operate. A recent study looked at 1,174 listed non-financial firms in India from 2005 to 2021 to see how they are adapting to climate risks.

The study found that corporate energy consumption, which makes up almost half of the country’s energy use, is being adjusted due to climate concerns. Companies that are more vulnerable to climate threats are cutting back on energy use, often in response to regulatory and reputational pressures.

Interestingly, energy-intensive firms are leading in this area since they face the most significant consequences for inaction. Moreover, firms with independent governance structures tend to respond better to climate risks. Since the 2016 Paris Agreement, many companies have started to take climate policies more seriously.

Of course, reducing energy consumption isn’t easy. Companies face a tough choice: they can take risks by cutting energy and potentially hurting productivity or ignore climate risks and face regulatory penalties.

Energy Efficiency as a Key Strategy

Our research indicates that firms aren’t just reducing energy use; they are also focusing on energy efficiency. By upgrading technology and optimizing processes, they can produce more with less energy. This approach helps decrease emissions while improving costs and resilience.

Investors are noticing this trend. Companies that show better energy efficiency often receive higher valuations, signaling that capital markets are starting to reward green practices.

India is in a pivotal position. While it ranks 115th out of 187 countries in climate vulnerability, it is also on target to be the third-largest global economy. More than 76% of its energy in 2021 still came from coal and oil, revealing a stark contrast between environmental challenges and growth needs.

The Role of Corporations in Addressing Climate Change

The solution won’t come solely from the government. Businesses must also take initiative. Our findings show that while companies are beginning to lead, their efforts are varied. In contrast to the slow pace of global climate negotiations, real progress might be happening at the corporate level.

For this transformation to continue, companies need support from the government. Clear regulatory frameworks, access to green finance, and transparent reporting are crucial for firms ready to commit to sustainability.

In summary, addressing climate change requires collaboration between businesses and regulators. The need for change is urgent, and with the right support, companies can lead the way toward a sustainable future.

Published by: Rishab Chauhan
Published On: Jul 27, 2025

For further reading on the interconnectedness of climate change and business strategies, visit the NYU Stern School of Business for in-depth studies and reports.

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climate change india corporate response iim raipur research energy efficiency indian firms sustainability reporting climate risk transition risk business responsibility india emissions reduction corporate governance environmental compliance indian companies climate adaptation climate policy india