Globally there has been an acceptance ( albeit of varying degrees) that human induced climate change needs to be addressed. In the absence of a global agreement which is not yet in sight, various countries, regions, and private companies have taken commitments and are at different levels of implementing them. Europe has been the leader from a policy point of view followed by some other countries and states in the USA. There have been unilateral policy initiatives by private players like Walmart, GE etc. where they are asking for disclosures on Carbon and other environmental parameters from their suppliers. The Indian scenario has been one of taking small steps to address climate change mitigation and there are no requirements to report or improve on carbon footprint on organizations. The Indian export sector which is dependent largely on the western markets has grown more than 25% annually and is thus the first to be affected by any climate change related policy initiative by the governments or buyer companies in the west. This dissertation studies the current policy initiatives from publicly available data both in the west and India. As part of the research a survey was conducted using a questionnaire to assess levels of Awareness, Action taken, perception of Risk and Opportunity and Market Behaviour. There is a detailed analysis of the data collected in the survey which points to the fact that a lot needs to be done to remain competitive in a carbon constrained world order. Based on the analysis there is a strategy proposed for the Indian export sector to retain their competitive advantage with regards to the upcoming policy initiatives around climate change.

1. The University of Edinburgh
School of Geosciences and School of Business & Economics
Title: Readiness of Indian Export Sector and Strategy to deal with
Climate Change Policy
By: S 0897951
Dissertation Presented for the Degree of MSc in Carbon Management
Supervisor: Prof Stuart Sayer
The University of Edinburgh
(2010)
Word count:

2. Acknowledgement
My Family, specially my sons Krish and Parth have been very patient with me during
my study period and am really thankful to them.
I’m much indebted to my dissertation supervisor, Professor Stuart Sayer for his
insightful advise, support, freedom and encouragement which was much needed
since I was based in India when doing the research.
I am very grateful for the support that I got from Anish, Mahesh and Vikrant from
NMIMS, India who helped me design, review and execute the survey questionnaire.
They were instrumental in making this research report possible and it would not be
possible to complete this in the three month time frame.
I would like to thank the various company representatives all of whom I can’t name
as there are too many, who took time out of their busy schedules to answer the
questionnaire.
This dissertation has presented many challenges as hardly any published literature
was available and I had some useful help from Frances Way and Nigel Topping from
carbon disclosure project.
I wish to thank all the people who commented on my pilot questionnaire and those
who encouraged me to take up this challenge of primary research which at times
looked impossible given the time constraint.

3. Abstract
Globally there has been an acceptance ( albeit of varying degrees) that human
induced climate change needs to be addressed. In the absence of a global
agreement which is not yet in sight, various countries, regions, and private
companies have taken commitments and are at different levels of implementing
them. Europe has been the leader from a policy point of view followed by some other
countries and states in the USA. There have been unilateral policy initiatives by
private players like Walmart, GE etc. where they are asking for disclosures on
Carbon and other environmental parameters from their suppliers.
The Indian scenario has been one of taking small steps to address climate change
mitigation and there are no requirements to report or improve on carbon footprint on
organizations. The Indian export sector which is dependent largely on the western
markets has grown more than 25% annually and is thus the first to be affected by
any climate change related policy initiative by the governments or buyer companies
in the west.
This dissertation studies the current policy initiatives from publicly available data both
in the west and India. As part of the research a survey was conducted using a
questionnaire to assess levels of Awareness, Action taken, perception of Risk and
Opportunity and Market Behaviour. There is a detailed analysis of the data collected
in the survey which points to the fact that a lot needs to be done to remain
competitive in a carbon constrained world order. Based on the analysis there is a
strategy proposed for the Indian export sector to retain their competitive advantage
with regards to the upcoming policy initiatives around climate change.
About the Author
The Author is a Chemical Engineer and has 15 years of experience in Supply Chain,
Operations, Automation and Business Consulting. He is widely travelled having
worked in more than 12 countries. His areas of competence include Environmental
solutions, IT systems, Clean Manufacturing solutions and Sustainability advisory. He
is a avid hiker and reader.

4. TABLE OF CONTENTS
Acknowledgement
Abstract
Chapter 1
1. Introduction
Chapter 2
2. Literature Review
2.1 Climate change policies in US and Europe
2.1.1 Climate change policies formulated in US
2.1.2 Climate change policies formulated in EU
2.3 Initiatives taken by the Private Players
2.3.1 Carbon Disclosure Project
2.3.2 Carbon management a part of the corporate strategy
2.4 Multilateral Initiatives
2.4.1 World Business Council for Sustainable Development
2.4.2 Global Reporting Initiative
2.4.3 United Nations Global Compact
2.4.4 Principles for Responsible Investment
2.4.5 Equator Principles
2.4.6 Some other measurement tools
2.4.6.1 Dow Jones Sustainability Index
2.4.6.2 FTSE4Good
2.5 Development of Indian Industry
2.5.1 Key Industries
2.5.2 Energy efficiency measures
2.5.3 Policies to Promote Energy efficiency measures:
2.5.4 Risks and opportunities

5. 2.6 India’s Carbon Footprint
2.7 Climate Change Policy of Government of India
2.8 Indian Businesses and Climate Change
2.9 Indian Business Bodies on Climate Change
2.9.1 Confederation of Indian Industry (CII)
2.9.2 Federation of Indian Chambers of Commerce & Industry (FICCI)
2.9.3 National Association of Software and Services Companies (NASSCOM)
2.10 Policy Impact on Business Competitiveness
2.10.1 Business Competitiveness
2.10.2 Measuring Low Carbon Competitiveness
2.10.3 Policy Impact on Business Competitiveness
Chapter 3
3. Methodology of the Study
3.1 Details of the Approach:
3.2 Methodology of Analysis:
3.3 Limitations of the Approach:
Chapter 4
4. Analysis
4.1 Summary of Responses
4.2 Awareness of sector companies regarding climate change
4.3 Actions taken by sector companies regarding climate change and sustainability
4.4 Risk or Opportunity perceived by sector companies regarding climate change
4.5 Market Behaviour regarding climate change and sustainability
4.6 Correlations
4.6.1 Correlation on the basis of positive feedback
4.6.2 Correlation on the basis of negative feedback
4.7 Readiness of Sector Companies
4.8 Conclusion
Chapter 5
5. Strategy Development
5.1 Strategy
Chapter 6
6. Conclusion
Annexure A1: Old Survey Questionnaire

6. Annexure A2: New Survey Questionnaire
Annexure A3: Responses to the Survey
References
List of Figures
Figure 1: Proposed emissions reduction under Waxman-Markey bill....................... 13
Figure 2: EU greenhouse gas Emissions, 1990-2020, and the EU ETS component 15
Figure 3: Development of Indian Industry................................................................. 22
Figure 4: India' GHG Emission by Sector and Climate change trapezium.............. 26
s
Figure 5: CO2 Emissions per unit of GDP................................................................ 28
Figure 6: India - CO2 Emissions by sectors ............................................................. 29
Figure 7: Expenditure on Adaption Programme in India........................................... 30
Figure 8: European and East Asian countries - low carbon competitiveness index . 36
Figure 9: Share of Top 5 Commodity group in India’s Export 2009 - 10................... 41
Figure 10: Q1- Effect of Climate change .................................................................. 46
Figure 11: Q2 - Measures taken by Company.......................................................... 46
Figure 12: Q4 - Negative Feedback to Q2................................................................ 47
Figure 13: Q5 – Awareness of Policies .................................................................... 47
Figure 14: Q7 - Major Challenges ............................................................................ 48
Figure 15: Q8 - Impact on Competitiveness ............................................................. 49
Figure 16: Q9 – Stakeholders’ reaction .................................................................... 50
Figure 17: Q10 - Negative Feedback to Q9.............................................................. 50

7. Figure 18: Q11 - Awareness about Border Tax Adjustment ..................................... 51
Figure 19: Q12 - Positive Feedback to Q11 ............................................................. 51
Figure 20: Q13 - Awareness of CDP and GRI.......................................................... 52
Figure 21: Q14 - Sustainability ................................................................................. 52
Figure 22: Q15 - Reporting of Carbon Footprint....................................................... 53
Figure 23: Q16 - Stakeholders'Reaction ................................................................. 53
Figure 24: Q17 - Negative Feedback to Q16............................................................ 54
Figure 25: Q18 - Sustainability ................................................................................. 54
Figure 26: Awareness .............................................................................................. 55
Figure 27: Action ...................................................................................................... 56
Figure 28: Risk / Opportunity.................................................................................... 58
Figure 29: Market Behaviour .................................................................................... 59
Figure 30: Strategy................................................................................................... 76
List of Tables
Table 1: India' Export 2009-10................................................................................ 24
s
Table 2: Q3 - Positive Feedback to Q2 .................................................................... 46
Table 3: Q6 - Positive Feedback to Q5 .................................................................... 48
Table 4: Q8 - Positive Feedback to Q7 .................................................................... 49
Table 5: Awareness.................................................................................................. 55
Table 6: Action ......................................................................................................... 56
Table 7: Risk or Opportunity..................................................................................... 57
Table 8: Market Behaviour ....................................................................................... 58
Table 9: Correlation on the basis of Positive Feedback ........................................... 59
Table 10: Correlations on the basis of Negative feedback ....................................... 60

8. Table 11: Readiness and Competitiveness .............................................................. 62
Chapter 1
1. Introduction
Climate change is emerging as the foremost challenge to the human race (Clinton
2007; Stern 2007). To over come this there have been various actions like the Kyoto
Protocol, the EU ETS regime, UK CRC, and other private initiatives like CDP,
Walmart and Tesco restructuring their procurement policy to include carbon as a key
component. In the absence of a global deal there is increased talk of discouraging
import of carbon from countries like china and India. There is high likelihood of some
measures in the west to control the embodied carbon in imported goods in the future,
which is partly due to climate change concerns and partly due to local political
pressure on jobs in the west. Similar fears have been raised in Indian business
policy circles at various forums that low income countries like India will face greater
difficulties exporting in a climate constrained world where carbon emissions need to
be measured and certification obtained to enable participation in trade. There are
initiatives on the table like international reserve allowance, carbon labelling , border
adjustment tax being discussed in the west on making climate change related
disclosures and non tariff penalties as a prerequisite for doing business with
exporting companies. European Parliament, for example, has recently passed
a resolution that calls for “the introduction of WTO compatible common standards
and labelling schemes regarding the GHG implications of different products,
including at the production and transport stages”; “a procedure to assess and label
these ecological footprints and to develop software in order to enable businesses to
calculate the quantity of GHG emitted from every production process”; and “the
development of a scheme based on sound life-cycle data which includes finished
goods, such as cars and electronic equipment” (European Parliament 2007).
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9. India has a very low carbon foot print since it is yet to reach the consumption levels
of the developed world but there is a urgent need for the Indian government to put in
place a carbon constraining system in place for the Indian businesses.
The first sector which will directly get affected due to any change in the policy in
Europe or USA and India is the Indian export sector, since the exposure to those
markets is very high. Since primary data is not available a Survey questionnaire
seems to be the best idea to get information on the readiness of the companies on
parameters like Awareness, Action taken, perception of Risks and Opportunities and
by doing some statistical analysis find some co-relation between these parameters to
better understand the scenario. Based on the data analysis a strategy approach to
the industry is needed which gives a starting point to begin taking some action to
remain competitive in future.
Purpose
The primary aim of this thesis is to study the policy initiatives in EU, USA and India,
then by survey find if the Indian exporting companies are ready to remain
competitive with regards to Climate Change policies on constraining carbon. After a
detailed analysis of the survey results draw a strategy to close the gaps found in the
survey. There has been no literature or a similar research done before on the topic of
this dissertation which could be used by the export sector in India and the buyers in
the west to formulate the right response to climate change policy without affecting
the supply chains. This Dissertation is an attempt to fill this gap which has been spelt
to the author by quite a few business houses in India.
Scope
Research focuses on finding out if the Indian export sector is ready to deal with the
Climate change policy initiatives being planned in the USA and EU which are the key
markets for them. The Competitiveness of the exporting companies depends on their
appreciation of the issue of climate change and the upcoming policy environment in
their markets.
The strategy formulation at the end is based on an extensive survey carried out by
the author by contacting exporting companies with a questionnaire. The Survey
results are used to draw for conclusions and do analysis on the readiness and of the
Indian export sector.

10. Outline
The study progresses in stages. The next chapter tries to capture from the available
literature and other public sources the key climate change policy initiatives by EU,
USA, private and multilateral bodies. It also looks at the Indian perspective and
policy frameworks available or planned. Finally the chapter ends with analysing the
policy impacts on the business competitiveness of the Indian export industry.
The subsequent chapter (Chapter 3) presents the arguments supporting the
approach taken to the research in terms of the approach, methodology and
limitations. of the research approach. Chapter 4 itself presents the Questionnaire
which was used to survey and collect data from the various exporting companies in
India, it represents the core of this research in terms of analysing the responses on
parameters like awareness, Action, Risk and opportunity and market behaviour. It
also attempts to draw some co-relation between these parameters using statistical
tools. It ends with an assessment of the readiness of the sectors.
Chapter 5 builds on the conclusions of the previous chapter and gives a strategy
which can be followed by the Indian export companies to better compete in the
market place in future with regards to climate change. The final Chapter 6 is a brief
conclusion for the research dissertation which summarises the report.

11. Chapter 2
2. Literature Review
Climate change is a major concern the world over. The unrestricted carbon emission
by some of the most industrialized countries in the last century has contributed to
this cause the maximum. However, in the recent times the developing countries
notably China and India, which are growing at a stupendous pace, have also been
emitting substantial greenhouse gases into the atmosphere. This has brought them
under the spotlight more so after the non-ratification of the Kyoto Protocol by the US.
The developing countries are major polluters but still the per capita carbon emission
is very less as compared to their counterparts in the EU and US.
The late advent of industrialization in India and China did not allow them to match
industrial growth of the western world for most part of the last century. However,
since the early 1990s the high rate of growth witnessed in China and India propelled
both these countries into a select group of notorious environment polluters. The high
rate of growth of a necessity for these countries if they have to alleviate large scale
poverty and also come good various human development which are tracked the
world over.
However, pressure has been mounting on China and India to commit to emission
cuts in the wake of their growing contribution to the gross global greenhouse gas
emissions. The EU and US seem bent on pushing ahead with various border
adjustment measures supposedly for preventing carbon leakage. However, these
measures have already earned a lot of flak because they are being seen as the
protectionist measures being initiated in the guise of carbon footprint management.
In light of all these developments, Industries in India have come a long way since the
time liberalization began and now competing at the global scale and therefore, these
measures being proposed and implemented in the developed world can have
serious consequences for these industries in India are concerned. The Indian

12. industries lack adequate knowledge and the technical know how to come to terms
with the stringent carbon emission norms. However, the Indian industries have taken
some steps to check their carbon footprints and reduce other polluting effects of their
business operations. The government of India is also pushing ahead with its agenda
of have a broad based action plan on climate change. The national action plan does
not commit any reductions in GHG emissions but pledges that “India’s per capita
emissions will never exceed the average per capita emissions of the developed
nations”.
2.1 Climate change policies in US and Europe
2.1.1 Climate change policies formulated in US
Before the adoption of the Kyoto Protocol in 1997, the US Senate unanimously
passed the Byrd-Hagel Resolution, declaring that the United States should not agree
to binding commitments if the agreement was not accompanied by developing
country commitments to reduce or limit emissions, or would cause serious harm to
the United States economy.2 As a consequence US never ratified the Kyoto Protocol
and in fact in 2001, following the unsuccessful sixth Conference of the Parties (COP)
to the UNFCCC, the US Administration rejected the Kyoto Protocol as an agreement
that was ‘fatally flawed in fundamental ways’.3
US climate policy since then has been notable for its absence of mandatory
greenhouse gas emission reductions – in contrast with the EU – and its emphasis on
research and development of clean technologies.4 However, some progress has
been made on the emissions reduction front by the US. The American Clean Energy
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13. and Security Act, previously known as the Waxman-Markey climate and energy bill
was passed by the US House of Representatives on 26 June 2009 which is a variant
of cap-and-trade plan.
Figure 1: Proposed emissions reduction under Waxman-Markey bill
Source: Climate Strategies
Border Carbon Adjustments
Border Carbon Adjustment measures which have been a source of controversy are
being actively discussed in US as well as EU. The border adjustment measures have
become a source of concern among the developing countries as the as this is being
seen as a disguised protectionist measure which in a way seeks to hinder the growth
plans of the developing countries by restricting their access to markets in developed
countries.
International Reserve Allowance
The “America’s Climate Security Act,” introduced by Senators Lieberman and
Warner establishes an international reserve allowance program, which effectively
requires US importers of covered goods from covered countries (see the following
sections) to purchase international reserve allowances from the Administrator of the
US EPA5, or secure allowances or credits from recognized foreign programs6. A
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14. separate reserve is created for the allowances that need to be purchased7,and
international allowances cannot be used for compliance purposes by domestic
industries8. In order for goods to enter into the country, US importers are required to
provide a written declaration, which includes a ‘compliance statement’, stating that
the good is covered by the international reserve allowance requirement or that the
good originates from an exempted country9. If the latter proves impossible, the
importer is required to state in which countries components of the good were
produced, to provide an estimate of the required allowances, and to submit this
number of allowances or a financial deposit to cover their purchase10.
2.1.2 Climate change policies formulated in EU
In March 2007, the European Council endorsed an EU objective of a 30% reduction
in greenhouse gas emissions (GHG) by 2020 provided that other developed
countries would commit themselves to comparable emission reductions and
economically more advanced developing countries contribute adequately according
to their responsibilities and respective capabilities. The Council also made a firm
independent commitment of at least a 20% reduction of GHG emissions by 2020,
irrespective of any international agreement.11
The EU ETS, the world’s first major green house trading scheme, which was
designed to be implemented in phase right from the outset has been instrumental in
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2.

15. the reduction of carbon emissions. Studies12 suggest that EU ETS in its first two
years cut emissions by 50-100 MtCO2/yr or by around 2.5-5 percent.
Figure 2: EU greenhouse gas Emissions, 1990-2020, and the EU ETS
component
Source: Carbon Trust, “Cutting carbon in Europe: The 2020 plans”, June 2008
Climate Change and Energy Package
However, Border Tax Adjustments provisions have already been included in the
post-2012 climate change and energy package finalized by the EU in December
200813. The EU package inter alia aims at achieving at least a 20 per cent reduction
in GHG emissions from 1990 levels by 2020, raising the target to 30 per cent in the
event of an international agreement (under the UNFCCC) committing other
developed countries to comparable emission reductions and economically more
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The package was proposed by the European Commission on 23 January 2008 [See EC (2008)]. A revised (watered-down)
version of the package was finally adopted by the European Parliament on 17 December 2008. The package proposed a 20-
20-20 targets for the EU to achieve by 2020: a 20-per cent reduction in GHG emissionsfrom 1990 levels; increasing the
share of renewables in the EU’s energy mix to 20 per cent from 8.5 per cent today; and a 20-per cent cut in energy use
through improved energy efficiency.(cited in “#0 " 2 3 "4 5
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16. advanced developing countries to contributing adequately according to their
responsibilities and respective capabilities. 14
With this aim in view, the 2008 package includes, among other things, an array of
proposals towards strengthening and expanding the EU Emissions Trading System
(EU ETS) beyond 2012 and improving its functioning. These proposal include inter
alia the following: (i) a much larger share of allowances to be auctioned in the third
phase of the ETS (2013-20) instead of being allocated for free, which is the
predominant practice under the first two phases (2005-07 and 2008-12,
respectively); (ii) the scope of the ETS to be extended with the inclusion of a number
of new sectors like aluminium and ammonia, as well as two more GHGs (nitrous
oxide and perfluorocarbons) under its purview (in addition to CO2)15.
Border Tax Adjustments measure at WTO
The controversial tax adjustment measures are likely to face the hurdles in the form
of international trade related agreements. The conformance of these provisions to
the ‘border tax adjustment’ is highly debatable. Also, it is interesting to see that
whether these provisions can stand the test under
the ‘General Exceptions’ provisions of the Article XX of GATT. The authors are of
the view that EU could face significant difficulties in establishing that the proposed
Carbon Equalisation (CES) are WTO-compliant. But they also opine that no
definitive conclusion can be reached on this contentious and complex issue of WTO-
compatibility or otherwise of the CES unless and until such a measure gets
implemented and comes under the scanner of the WTO dispute settlement system.16
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17. Carbon Labelling
Carbon labelling which is an important part of the proposed EU regulations on bio-
fuels, is an instrument in the toolbox of measures available to mitigate climate
change . The credibility of the information is paramount for the carbon labelling
scheme to be able to achieve its objectives of enlightening the consumers and
buyers in choosing emission efficient products.17
2.3 Initiatives taken by the Private Players
Besides all these steps being taken at the Governmental levels, several private
players have also chipped in significant contribution to the cause of addressing the
growing concerns about the climate change.
2.3.1 Carbon Disclosure Project
The Carbon Disclosure Project Supply Chain is a collaboration of global corporations
who have extended their climate change and carbon management strategies beyond
their direct corporate boundaries to engage with their Suppliers18. Hewlett Packard,
L’Oreal, PepsiCo, Reckitt Benckiser, Wal-Mart, Cadbury Schweppes, Nestlé, Procter
& Gamble, Tesco, Imperial Tobacco, Unilever and Dell have partnered with the CDP
to produce supply chain emission data. Each company has selected suppliers to
work with and is scheduled to respond to an information request by the CDP.19
2.3.2 Carbon management a part of the corporate strategy
Moreover, firms are eager to cater to consumers’ demands and to reduce their own
carbon footprints. Global retail giants, such as, UK Tesco or US Wal-Mart are
developing carbon labelling schemes and major manufactures are following suite.
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18. Tesco chief executive Terry Leahy announced plans to carbon-label all products on
Tesco’s shelves The stated objective is to allow consumers to integrate carbon
emissions into their purchasing decisions by providing information in the same easily
accessible way as for nutritional value or price. So far no more than a handful of
products have been carbon labelled, although an interim system has been
developed that puts a small airplane symbol on air-freighted products. This has been
implemented under the assumption that airfreight is a major source of the carbon
emissions in a product’s life cycle. The airplane symbols have also been used by
Tesco’s competitor Marks & Spencer and by the Swiss supermarket Popular outdoor
garments manufacturers Patagonia and Timberland, for instance, are also seeking to
satisfy their nature friendly consumers.20
On July 16, 2009, Walmart announced plans to develop a worldwide sustainable
product index, which is expected to lead to higher quality, lower costs and measure
the sustainability of products and help customers, live better in the 21st century. One
of the biggest challenges we all face is measuring the sustainability of a product.
Walmart believes a research-driven approach involving universities, retailers,
suppliers and non-government organizations (NGOs) can accelerate and broaden
this effort.21
2.4 Multilateral Initiatives
2.4.1 World Business Council for Sustainable Development
The World Business Council for Sustainable Development (WBCSD) is a CEO-led,
global association of some 200 companies dealing exclusively with business and
sustainable development. The WBCSD works with its members to develop and
communicate business'views and potential solutions to the international energy and
climate challenge. Recognizing that climate change presents both risks and
opportunities for global business.22
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19. 2.4.2 Global Reporting Initiative
The Global Reporting Initiative (GRI) is a multi-stakeholder process and independent
institution whose mission is to develop and disseminate globally applicable
Sustainability Reporting Guidelines.
Guidelines are for voluntary use by organizations reporting on the economic,
environmental, and social dimensions of their activities, products, and services.
Started in 1997 by the Coalition for Environmentally Responsible Economies
(CERES), the GRI became independent in 2002, and is an official collaborating
centre of the United Nations Environment Programme (UNEP). The Global Reporting
Initiative (GRI) produces one of the world' most prevalent standards for
s
sustainability reporting - also known as ecological footprint reporting, Environmental
Social Governance (ESG) reporting, Triple Bottom Line (TBL) reporting.23
2.4.3 United Nations Global Compact
The United Nations Global Compact, also known as Compact or UNGC, is a United
Nations initiative to encourage businesses worldwide to adopt sustainable and
socially responsible policies, and to report on their implementation. According to
UNGC, businesses should support a precautionary approach to environmental
challenges, undertake initiatives to promote environmental responsibility and
encourage the development and diffusion of environmentally friendly technologies.24
2.4.4 Principles for Responsible Investment
In early 2005 the United Nations Secretary-General invited a group of the world’s
largest institutional investors to join a process to develop the Principles for
Responsible Investment (PRI). Individuals representing 20 institutional investors
from 12 countries agreed to participate in the Investor Group. The Group accepted
ownership of the Principles, and had the freedom to develop them as they saw fit.
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20. The process was coordinated by the United Nations Environment Programme
Finance Initiative (UNEP FI) and the UN Global Compact. The PRI reflects the core
values of the group of large investors whose investment horizon is generally long,
and whose portfolios are often highly diversified. However, the Principles are open to
all institutional investors, investment managers and professional service partners to
support.25
2.4.5 Equator Principles26
The Equator Principles (EPs) are a voluntary set of standards for determining,
assessing and managing social and environmental risk in project financing.
In October 2002, a small number of banks convened in London, together with
the World Bank Group' International Finance Corporation (IFC) and decided
s
jointly to try and develop a banking industry framework for addressing
environmental and social risks in project financing. This led to the drafting of
the first set of Equator Principles by these banks which were then launched in
Washington, DC on June 4 2003 and updated in July 2006.
2.4.6 Some other measurement tools
In addition to numerous initiatives taken irrespective them being voluntary or
multilateral commitments, there have also evolved some other measurement tools
which can be used for the assessment of the investments made by investors. These
tools help the investors make Socially Responsible Investments. A few of the tools
are discussed below:
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21. 2.4.6.1 Dow Jones Sustainability Index27
Launched in 1999, the Dow Jones Sustainability Indexes are the first global
indexes tracking the financial performance of the leading sustainability-driven
companies worldwide.
The Dow Jones Sustainability Indexes are a cooperation of Dow Jones
Indexes, STOXX Limited and SAM Group.
Currently 70 DJSI licenses are held by asset managers in 16 countries to
manage a variety of financial products including active and passive funds,
certificates and segregated accounts.
2.4.6.2 FTSE4Good28
The FTSE4Good Index Series has been designed to measure the
performance of companies that meet globally recognised corporate
responsibility standards, and to facilitate investment in those companies.
FTSE brand make FTSE4Good the index of choice for the creation of Socially
Responsible Investment products.
FTSE4Good can be used in four ways:-
Investment-- A basis for socially responsible financial instruments and fund
products
Research-- A research tool to identify socially responsible companies
Reference-- A reference tool to provide companies with a transparent and
evolving global corporate responsibility standard to aspire to and surpass
Benchmarking-- A benchmark index to track the performance of socially
responsible investment portfolios
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22. 2.5 Development of Indian Industry
In the 1990s, following economic reform of post independence India began to
experience rapid economic growth as markets opened for international
competition and investment. In the 21st century, India is an emerging economic
power with vast human, natural resources and a huge knowledge base.29
Figure 3: Development of Indian Industry
2.5.1 Key Industries
Gems & Jewellery
Gems and jewellery form an integral part of Indian tradition. According to Credit
Analysis and Research Limited (CARE), the domestic jewellery market in India is
pegged at US$ 16 billion. The organised sector of the gems and jewellery industry in
India is estimated to grow at 40 per cent per annum. India' polished diamond
s
exports were up by 11 per cent at US$ 13.8 billion from period of the previous fiscal,
while polished diamond imports increased 15.5 per cent to US$ 8.5 billion.
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23. Textiles:
Textiles, the largest industry in the country employing about 20 million people,
account for one third of India' total exports. Textile sector accounts for nearly 14%
s
of the total industrial output. However, the textile sector is largely unorganized and
dispersed. Due to this, the industry is suffering from technological obsolescence and
lack of up-to-date machinery for production of fabric, yarn and ready-made
garments. Initiatives such as Technology Up gradation Funds Scheme (TUFS),
Scheme for Integrated Textile Parks (SITP), excise and import duty liberalization of
textiles and textile machinery lead growth of textile industry.30
Engineering and Machine Tools:
With production of wide range of items, India is a major exporter of heavy and light
engineering goods. The bulk of capital goods required for power projects, fertilizer,
cement, steel and petrochemical plants and mining equipment, construction
machinery are made in India.31
Petroleum Products
The oil and gas industry has been instrumental in fuelling the rapid growth of the
Indian economy. India has total reserves of 775 million metric tonnes (MMT) of crude
oil and 1074 billion cubic metres (BCM) of natural gas as on April 1, 2009, according
to the basic statistics released by the Ministry of Petroleum and Natural Gas.
Petroleum exports during 2008-09 were US$ 26.2 billion.
Chemicals and related Products
Chemical Industry is one of the oldest industries in India, which contributes
significantly towards industrial and economic growth of the nation. Its size is
estimated at around US$ 35 billion approx., which is equivalent to about 3% of
India' GDP. The Indian Chemical sector accounts for 13-14% of total exports and 8-
s
9% of total imports of the country. With investments in R&D, the industry is
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24. registering significant growth in the knowledge sector comprising of specialty
chemicals, fine chemicals and pharmaceuticals.32
Table 1 below shows the exports data of the above mentioned sectors for the year
2009 -10.
Table 1: India's Export 2009-10
Apr-Mar
Commodity %Share
2009
GEMS & JEWELLERY 128,575.19 16.23
TEXTILES 88,491.61 10.72
ENGINEERING GOODS 183,997.80 18.34
PETROLEUM PRODUCTS 123,397.91 15.69
CHEMICALS & RELATED 109,883.82 13.64
PRODUCTS
Others 206,408.72 25.38
Total 840,755.05 100
Data Source: DGCIS, Kolkata
2.5.2 Energy efficiency measures
Government has identified the need for energy efficiency in buildings and has
been encouraging energy efficient consumption patterns among Indian
households. The National Environmental Policy (NEP) drafted in 2004 is a
milestone for the Indian Environment and Building Technologies (EBT)
industry.33
Impact of the economic indicators on the Indian EBT industry for the period 2006-09
Economic Impact on the EBT Industry
Indicator
Consumption and • Construction investment is expected to increase by 5.7%
--- / 0 / , /
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25. Government annually during the period 2006 to 2009, reflecting an increase
Expenditure in lighting equipment, HVAC equipment, BAS, energy saving
techniques
• Government budgetary outlay for the Ministry of Environment
and Forests (MoEF) is likely to increase by almost 3% from
2006 to 2007.
Investment • India is expected to attract large investments in air pollution
prevention and control equipment, lighting equipment, BAS and
environmental services segments.
• R&D activities are expected to be increased, with focus on
emerging technologies for lighting equipment, HVAC
equipment, and environmental equipment segments.
Exports • The exports for the EBT industry are expected to record a
CAGR of 15 % and imports are likely to register a CAGR of
10.3 % for the period 2005-2009.
• The international agreements and stance of the government
are expected to drive the trade in the EBT industry from 2006 to
2009.
Imports • The environmental equipment and lighting equipment
segments have greatly benefited from the increase in imports,
as the Indian EBT industry is an import-driven industry.
Source: Frost & Sullivan
2.5.3 Policies to Promote Energy efficiency measures:
• Electricity from renewables
• Enhancing Efficiency of Power Plants
• Introduction of Labelling Programme for Appliances
• Energy Conservation Building Code
• Energy Audits of Large Industrial Consumers
• Accelerated Introduction of Clean Energy Technologies through the CDM

26. The Indian companies have started putting in place systems to monitor and report
their GHG emissions. The percentage of companies giving an account of their GHG
emissions in CDP 2009 stands at 63% (24). This number has almost doubled since
CDP6 (2008), when only 33% (17) of the respondents disclosed their GHG
emissions. Software & Services sector has outperformed its compatriots in carbon
and energy intensive sectors such as Energy & Capital Goods sector, whose
disclosure was below average. 68% (26) of the respondents to CDP 2009 have
reduction plans in place for slashing either their energy or GHG emissions. 51% (19)
of the respondents shared the risks and opportunities posed by climate change
(including the details of emissions and mitigation plans) with their stakeholders
through various corporate communication channels
Figure 4: India's GHG Emission by Sector and Climate change trapezium

27. 2.5.4 Risks and opportunities
Regulatory Risks: No direct risks, international market compliance, Future
Regulations, Investment uncertainty.
Regulatory Opportunities: Demand for energy efficient technologies, Demand for
renewable energy, Improved Energy Efficiency, Product & technical innovation,
Capture International market, Alternative products & solutions, Reduce dependence
on fossil fuel, evolve environmentally sound practices, lower GHG emissions.
Other Risks: Resource Scarcity, Increased production & operational cost, Shift in
consumer demand, commercial & competitive risks, Change in consumption
patterns, Reputation risks, financial risks, Lack of incentives for performers, Investor
risks, Insurance risks, External pressure and health impacts.
Other Opportunities: Enhanced financial & environmental performance, increased
productivity, carbon finance business, Sustainable Solution market, Nuclear energy,
Research in alternate products, Carbon Neutral, Low Carbon Intensity Preference,
competitive market.
Physical Risks: Damage, disruption and displacement; precipitation, temperature
extremes, frequent floods, cyclones, drought, frequent storm and hurricane, sea level
rise, disease and migration. Production, Logistic network breakdown, safety &
commercial losses, more energy demand, Risk to agribusiness, loss to portfolio
companies, fluctuations in fuel and commodity prices
Physical Opportunities: Smart & efficient solutions, improved products & services,
Improved resource productivity and management, strengthening logistic network,
increased market demand.34
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28. 2.6 India’s Carbon Footprint
India is one of the fastest growing economies in the world and the fourth largest
GHG emitter in the world (behind the US, China and the EU). Around 4% of the
global GHG emissions are contributed by India. However India’s per capita CO2
emissions are currently only 1.1 tonnes, when compared to over 20 tonnes for the
US and in excess of 10 tonnes for most OECD countries.35 In 2007, India’s CO2
emission intensity per unit of gross domestic product (GDP), valued at purchasing
power parity (PPP), was at the world average (see Figure 1).
Figure 5: CO2 Emissions per unit of GDP
Sources: World Bank, 200936
Note: GDP is valued at purchasing power parity in 2005 U.S. dollars.
According to the IEA Statistics, 2009, in India, a large share of GHG emissions is
produced by the electricity and the heat sector which represented 56% of in
2007, up from 42% in 1990 (see Figure 2). Manufacturing industries and construction
sector represents the other 22% of in 2007. The transport sector, which emitted
B @ . =2< !@ "6 2@ *@ $ < "B $ (.
% G *,0 * . ?%5 C :
8 , 4 ;%=. 6 . @ #
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29. only 9% of in 2007, is growing relatively slowly compared to the other sectors of
the economy. A recently published collation of five modeling exercises (MOEF,
2009) provides a range of estimates for India’s future emissions trajectory.
Projections of per capita emissions in 2031 range from 2.77 to 5 t , while total
emissions range from 4 billion to 7 billion t .37
Figure 6: India - CO2 Emissions by sectors
Sour
ces:
IEA
Stati
stics
,
Emis
sion
s by
Fuel
Com
busti
ons,
2009
C% / 3 /; ,
0 0 . ! # %=! / B B 0
. ?%@ /

30. 2.7 Climate Change Policy of Government of India
India is subject to high degree of climate variability resulting in droughts, floods and
other extreme weather events which compels India to spend over 2% of its GDP on
Adaptation and this figure is likely to go up significantly.
Figure 7: Expenditure on Adaption Programme in India
Source: Ministry of Environment & Forest, GOI , 200738
In 2008, Prime Minister Manmohan Singh publicly committed to ensuring that “India’s
per capita emissions will never exceed the average per capita emissions of the
developed nations and it would adopt purpose domestic actions to enhance its
climate change management”39. India plans to reduce its emission intensity by 20-
25% by 2020. India’s strategy for tackling climate change while pursuing
development is set out in its National Action Plan on Climate Change (NAPCC)
which was released on 30th June 2008. The NAPCC advocates a strategy that
promotes, firstly, the adaptation to climate change and secondly, further
enhancement of the ecological sustainability of India' development path. The
s
National Action Plan expresses India' willingness to act as a responsible member of
s
the international community and to make its contribution to mitigate global warming.
The Eight National Missions of NAPCC represents multipronged, long term and
integrated strategies for achieving key goals in the context of climate change. The
focus of NAPCC is on promoting understanding of causes and impact of climate
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%
39
Indian PM' speech on release of Climate Change Action Plan, June 2008.
s

31. change, its adaptation and mitigation, energy efficiency and natural resource
conservation. It includes a target to reduce the emissions intensity of India’s
economy (per unit of GDP) by 20 per cent between 2007/08 and 2016/17, also
articulated in the Eleventh Five Year Plan (2007-2012).
In the recent Union Budget on India, 2010, the government imposed a cess of Rs. 50
per tonne on coal. The levy will be used to create National Clean Energy Fund for
financing research and innovation in clean and green energy technologies.40
2.8 Indian Businesses and Climate Change
Corporations in India will be subject to increasingly stringent environmental
regulations from the government. The National Action Plan on Climate Change
policy mandates the setting up of energy benchmarks for various industry sectors
and allows for trading in energy efficiency certificates. Nine energy intensive sectors
have been identified and within these sectors, bands have been created which
classifies individual business units on the basis energy intensity levels. The nine
energy intensive sectors are:
1. Thermal Power Plant
2. Fertilizers
3. Cement
4. Iron and Steel
5. Aluminum
6. Chlor Alkali
7. Railways
8. Pulp & Paper
9. Textiles
Each industry is given a target to reduce their fuel consumption over a period of time.
If they surpass their target then they are awarded energy efficiency certificates which
can be traded on the open market of banked for the next round of efficiency targets.
Those failing to achieve their target will be forced to buy those credits. This gives
businesses a monetary incentive to become energy incentive.
4 . % 7 %$ - 6 , %C 7

32. Due to NAPCC, renewable energy and clean technology in India is likely to have a
huge growth in the coming times. Indian companies can exploit these business
opportunities that are likely to arise out of climate change mitigation and adaptation.
The global market for low-carbon technologies is estimated to amount to USD 3
trillion per year by 2050, throwing up significant commercial opportunities. It is
estimated that renewable energy, waste management and water treatment industries
will be worth USD 700 billion globally by 2010; on par with the value of the global
aerospace industry.41
Thus Indian businesses have an opportunity to gain competitive advantage by
proper planning and adapting their business model to a low carbon business.
2.9 Indian Business Bodies on Climate Change
2.9.1 Confederation of Indian Industry (CII)
Confederation of Indian Industry (CII) is a non-government, not-for-profit, industry led
and industry managed organization. CII works closely with government on policy
issues, enhancing efficiency, expanding business opportunities for industry through a
range of specialized services and global linkages.
Climate Change: CII Initiatives
The CII’s Climate Change Council has been formed to strategize on implementation
of the NAPCC and to engage industry, policy makers and R&D institutes to formulate
strategies to commit to accelerate deployment of clean energy technologies, build
capacity to access and internalize cutting edge technologies.
CII organizes various events and publishes various articles and reports to generate
awareness, highlight policy recommendations and help engage industry, government
and civil society. CII also renders various advisory services towards building a low-
carbon economy.
A B3 %= 0 8 79%

33. 2.9.2 Federation of Indian Chambers of Commerce & Industry
(FICCI)
A non-government, not-for-profit organization, FICCI is the voice of India' business
s
and industry. Established in 1927, FICCI is one of the oldest and largest apex
business organizations having a membership of over 83000 companies. FICCI
provides a platform for sector specific consensus building and networking.
FICCI in Carbon Space
FICCI partners with Royal Norwegian Embassy, New Delhi in developing CDM
projects in India. FICCI, being one of the most influential business federations in
India with a well established countrywide network, is distinctively placed to promote
the CDM concept among its members as well as other associated businesses with
its ABC approach:
• Awareness among Indian organizations about CDM benefits
• Build Capability for developing and implementing CDM Projects
• Carbon Trading Mechanism Establishment
2.9.3 National Association of Software and Services
Companies (NASSCOM)
NASSCOM was set up in 1988, at Mumbai to facilitate business and trade in
software and services and to encourage advancement of research in software
technology. NASSCOM’s diverse strengths include advocacy on public policy,
research and market intelligence services, international trade development and
access to an international network through 20 MoUs and linkages with 40 business
associations across the globe.
Green IT Initiative: Catalyzing Sustainable Growth
NASSCOM has recently announced its ‘Green IT’ initiative and NASSCOM’s Green
IT strategy is broadly aligned along the following three vectors:
Make IT Green: Adoption by industry of Green technologies and practices including
Green buildings, Green computing infrastructure, sharing infrastructure and
addressing issues like e-waste management.

34. Make Green Happen through IT: Deploy IT solutions which help firms become
Green including like Cloud Computing, video-conferencing, intelligent transport
systems, web-conferencing, motion and heat detection sensors etc.
Make Green warriors: Encourage the over 2 million employees of the IT-BPO
industry to adopt a Green life-style and thereby become change agents to catalyze
transformation and create a sustainable impact in the society around them.
2.10 Policy Impact on Business Competitiveness
2.10.1 Business Competitiveness
Business Competitiveness is all about being ahead of your competitors. When a firm
sustains profits that exceed the average for its industry, the firm is said to possess a
competitive advantage over its rivals. The goal of much of business strategy is to
achieve a sustainable competitive advantage.
A competitive advantage exists when the firm is able to deliver the same benefits as
competitors but at a lower cost (cost advantage), or deliver benefits that exceed
those of competing products (differentiation advantage). Thus, a competitive
advantage enables the firm to create superior value for its customers and superior
profits for itself.
The firm' resources and capabilities together form its distinctive competencies.
s
These competencies enable innovation, efficiency, quality, and customer
responsiveness, all of which can be leveraged to create a cost advantage or a
differentiation advantage.
2.10.1.1 National Competitiveness
A nation’s prosperity depends on its competitiveness, which is based on the
productivity with which it produces goods and services. Sound macroeconomic
policies and stable political and legal institutions are necessary but not sufficient
conditions to ensure a prosperous economy. Competitiveness is rooted in a nation’s
microeconomic fundamentals—the sophistication of company operations and
strategies and the quality of the microeconomic business environment in which

35. companies compete. An understanding of the microeconomic foundations of
competitiveness is fundamental to national economic policy.42
2.10.1.2 International Competitiveness
The concept of international competitiveness is often used in analyzing countries'
macroeconomic performance. It compares, for a country and its trading partners, a
number of salient economic features that can help explain international trade trends.
This concept encompasses, first of all, qualitative factors or factors that do not lend
themselves readily to quantification. Thus, capacity for technological innovation,
degree of product specialization, the quality of the products involved, or the value of
after-sales service are all factors that may influence a country' trade performance
s
favourably. Likewise, high rates of productivity growth are often sought as a way of
strengthening competitiveness.43
In the carbon constrained world the adaptability of the business activities to achieve
low carbon competitiveness has redefined the business competitiveness. The
growing concern and the inevitability of the low carbon world presents new
opportunities for carbon efficient businesses. The paradigm shift in the way world
sees the global competitiveness has led countries to see climate change as a threat
as well as a window of opportunity to stay competitive.
2.10.2 Measuring Low Carbon Competitiveness44
There are three elements to assessing overall low carbon competitiveness: where
countries are positioned now, the rate at which this is changing, and the scale of the
challenge they face.
The carbon competitiveness of any country can be done on the basis of the following
indices and metrics:-
7 The low carbon competitiveness index: This index explains the current
competitiveness
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/ 0
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*, B
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36. 7 The low carbon improvement index: This index measures the scope of
improvement
7 The low carbon gap index: This index seeks to explain quantitatively the
gap between the scope of improvement and the level of improvement
required given the growth rate of any particular country
Figure 8: European and East Asian countries - low carbon competitiveness
index
Source: Vivid Economics calculations in G20 low carbon competitiveness report
2.10.3 Policy Impact on Business Competitiveness
The global differential carbon-constraint regime is likely to affect the fundamental
aspects of International business:45
• Demand-Supply situation of carbon-intensive goods and services
• Trade flow pattern of carbon-intensive products, and hence, the relative
competitiveness of the sectors
• Long-term investment decision on capacity expansion
• Relocation of energy or carbon-intensive industries in non- or low carbon-
constrained countries.
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37. To optimally manage the impact of climate regulations on the growth,
competitiveness and hence the profitability of the individual business may require a
structured approach to carbon management.
Climate Competitiveness Index
The 2010 Climate Competitiveness Index, the most comprehensive study to date of
national progress to create green jobs and economic growth through low carbon
products and services, shows that in spite of uncertainty surrounding international
climate negotiations, countries have forged ahead with low carbon growth strategies
in the first quarter of 2010.
The annual Climate Competitiveness Index (CCI), produced by the independent non-
profit institute AccountAbility, in partnership with the United Nations Environment
Programme (UNEP), combines two sets of data.
It investigates "Climate Accountability" to validate if a country' climate strategy is
s
clear, ambitious and supported by stakeholders, as well as "Climate Performance,"
considering each country' capabilities and track record on delivering its strategy.
s
Thirty two countries have made significant improvements, with Germany, China and
the Republic of Korea being the outstanding examples. India, Indonesia, Kenya,
Mexico, the Philippines and Rwanda have also enhanced their climate
accountability.
Sweden, Denmark, Germany, Japan and France show the most consistent progress
on combining accountability and performance. Switzerland and Austria are strong on
performance, while the UK and USA are strong on accountability. The Republic of
Korea, Hong Kong and Malaysia are developing good strategies and the BASIC
nations (Brazil, South Africa, India and China) are progressing towards climate
competitiveness.
The CCI predicts that the global market for low carbon products and services will be
in excess of US$2 trillion in 2020. However, to secure this market, countries need
ambitious climate competitiveness strategies, as well as the institutional
infrastructure to build markets and convince investors.

38. The report underscores the importance of the business sector. It concludes that
business must play a proactive role in promoting climate competitiveness. Countries
that perform well on the CCI have a critical mass of firms managing, reporting on and
reducing their emissions - whilst aggressively growing portfolios of low carbon
products and services.
The CCI demonstrates that the best national performers have a coherent institutional
framework of low carbon support for business, including chambers of commerce,
stock exchanges, investment agencies, government departments and NGOs
dedicated to green growth.
Source:http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=620&ArticleID=6536&l=en last
viewed on July 27, 2010

39. Chapter 3
3. Methodology of the Study
Due to various polices and regulation related to climate change being imposed in the
US & EU which are the major importers of Indian goods, the Indian export sector is
subject to increasingly stringent environmental regulations. To study how Indian
export sector is responding to the problems and the challenges around climate
change we did a survey among various exporting companies. This chapter explains
how the questionnaire for the survey was prepared and how the interviews
conducted.
In the second part of this chapter we discuss how the analysis of the responses was
done. Basically we categorized the questions into 4 categories namely Awareness,
Action, Risk / Opportunity Perception and Market Behavior. Then it discusses the
various tools like SPSS, etc. we used for analyzing the responses obtained from the
companies.
In the final part we discuss the various limitations of the study like time available for
doing survey, geographical spread of the companies, availability of the right people,
etc.
3.1 Details of the Approach:
The basic approach of the paper was to first study about the historical and current
strategies of the Indian businesses on climate change, the policies of the Indian
government and other developed nations like the US and the EU in context to
climate change and the impact of these policies on business competitiveness of
Indian businesses.
We know that India is under tremendous international pressure to undertake binding
emission targets so as to limit its GHG emissions. The developed countries are
considering trade-based sanctions on Indian businesses if the country fails to commit

40. to binding targets. A large part of India’s business (investments and exports) is
dependent on Developed world where there are likely to be stricter policy related to
climate change. This will pose a huge risk for the Indian Exports sector because the
export sector will be subject to increasingly stringent environmental regulations not
only from the Indian government but also from the developed nations.
It is in this context we undertook this study to gauge the “Readiness and
Competitiveness of Indian Export Sector due to Global Policies on Climate Change”.
This research studies the policy environment (both private and public) in US, EU and
India. See its effects on Indian export sector and outline strategies for Indian export
sector to stay competitive and grow in a carbon constrained global environment.
India’s exports reached a level of US $ 185.3 billion during 2008 – 09 registering a
growth of 13.6 percent over the previous year. Our merchandise exports recorded an
Average Annual Growth Rate (AAGR) of 23.9 per cent during the five year period
from 2004-05 to 2008-09, as compared to the preceding five years when the exports
increased by a lower AAGR of 14.3 per cent. According to latest WTO data (2009),
India’s share in the world merchandise exports increased from 0.8 per cent in 2004
to 1.1 per cent in 2008. India also improved its ranking in the leading exporters in
world merchandise trade from 30th in 2004 to 27th in 2008. However, during the
year 2009 – 10 India’s exports reduced to US $ 178.66 billion registering a decline of
3.58% in US $ term over the corresponding period of the previous year. 46 The share
of top five Principal Commodity Groups in India’s total exports during 2009-10 (April-
March) is given at Chart 1.
B@ .% * 00 / E . %" , # 7

41. Figure 9: Share of Top 5 Commodity group in India’s Export 2009 - 10
6 3 / ( * 00 / E . %B @ .% #( 0 0
''/ / /
With the view of finding out how Indian export sector is responding to the problems
and the challenges around climate change we prepared a structured questionnaire
so as to collect the first hand information from the various exporting companies. The
questions in the questionnaire were framed in a particular order so as to get the
maximum information from the companies. While framing the questionnaire it was
ensured that questions were not ambiguous for the interviewee and wherever
possible enough explanation was provided about the various terminologies used in
the questionnaire. While preparing the questionnaire opinion from the various
industry experts were taken. The pilot testing of the questionnaire was done on 10
companies and based on the feedback from the executives from those companies
the questionnaire was modified. The questionnaire is attached in the appendix A1.
This final questionnaire was emailed to the representatives of various exporting
companies from the Petroleum products group, Gems & Jewellery group, Textile
group, Chemicals & related products group and Engineering goods group. Also
some of the interviews with the executives were conducted on the telephone. For
companies which had a base in Mumbai, India direct face to face interviews were

42. conducted by visiting these companies whenever an appointment was fixed with
their representatives. To get the contact details about the various exporting
companies, various business bodies like Gems & Jewellery Export Promotion
Council (GJEPC), Apparel Export Promotion Council (AEPC), The Cotton Textile
Export Promotion Council of India (TEXPROCIL), etc. were contacted. The details of
the responses are attached in the appendix A2. By preparing an unambiguous
questionnaire and having a few open ended questions has helped us to have
detailed interview and the best output.
3.2 Methodology of Analysis:
The questions in the questionnaire were categorized into 4 categories namely:
1. Awareness: Questions 1, 5, 11 & 13 from the questionnaire falls under the
awareness category. For e.g. “Are you aware of any polices of the
government with regards to Climate Change & GHG’s Reductions?” Through
such questions we are trying to gauge how much the company is aware about
the various domestic and the international policies related to climate change
that would have an impact on them.
2. Actions: Questions 2, 4, 15, 16 & 17 were categorized in the action category.
For e.g. “Has your company taken any measure to ascertain the GHG
emission from its operations?” By asking such questions we want to check
what all actions the company is taking with respect to climate change and
GHG’s reductions.
3. Risk / Opportunity Perception: Questions 7, 8, 12, 14 & 18 falls in the Risk /
Opportunity Perception category. For e.g. “What would be impact on your
competitiveness in the market if you don’t take proactive action on Carbon
Management & Sustainability?” Such questions checks how does the
company perceive the issue of climate change and global warming either as a
risk or as an opportunity for themselves.
4. Market Behavior: Questions 9 & 10 from the questionnaire were categorized
in the market behavior category. For e.g. “Have your customers asked you to
report your Carbon Footprint or Sustainability parameters?” In this category

43. we are measuring what is the behavior of the market in which the company is
operating in context to climate change and sustainable production of products.
Now to analyze the primary data collected, various statistical tools are used namely
SPSS and MS excel are used. SPSS (Statistical Package for Social Science) is a
comprehensive tool for analyzing data. SPSS integrates complex data and file
management, statistical analysis and reporting functions. Using correlation analysis
we have tried to understand the relationship between the 4 categories / variables i.e.
how much is response in category related to the responses in the other category.
Basically correlation analysis helps us understand the relationship between two
dependent variables on a scale of 0 to 1. If the correlation between 2 variables is
between 0 to 0.3 then the correlation between them is said to be low. Similarly
correlation between 0.3 to 0.7 is said to be moderately correlated and above 0.7 is
said to be highly correlated.
For analysis, we have reframed responses in 2 categories i.e. positive feedback and
negative feedback. For e.g.” Q4: In case you are not doing it will you want to do it the
next:”
a) 3 Months b) 6 Months c) 1 Year d) More than 1 Year
In this case options c & d are considered as negative feedback as it reflects delayed
action from corporate while options a & b indicates positive feedback as it reflects
quick action from them. So for Q4 we have clubbed the responses in a & b as
positive and responses c & d as negative feedback.
Similarly for “Q8: What would be impact on your competitiveness in the market if you
don’t take proactive action on Carbon Management and Sustainability?”
a) No Effect b) Marginal Effect
c) Substantial Effect d) Don’t Know the Effect
In this case options a & d are considered as negative feedback as it reflects poorly
on company' competitive strategy towards climate change initiative while Options b
s
& c are considered as positive feedback as it reflects company' concerns regarding
s
absence of proactive action towards climate change.

44. 3.3 Limitations of the Approach:
Every research study will have some or the other limitation. Our study had the
following limitations:
• Time: Only one month of time was available for preparing the questionnaire
and conducting the interviews. Due to this only few companies could be
covered in the allotted time. Also the concerned person from the company
was usually busy with some important work and hence could not provide the
details.
• Availability of the Right People: Climate change & Sustainability are generally
a strategic issues and hence contacting the right people who had the
knowledge about this issues was a very difficult task.
• Cost: Since we belong to students community lack of funding was also an
issue.
• Geographical Spread of the Target Companies: Due to the geographical
spread of the exporting companies, meeting with the representatives of only
those companies who has a base in Mumbai, India was possible. Interviews
with companies based outside Mumbai were either done through Telephone
or through E-mail.
• Lack of Support from the Companies: Over 400 companies were contacted
but only 36 companies responded, this shows the unwillingness of the
exporting companies to support such a research.

45. Chapter 4
4. Analysis
In this section, 36 responses from different companies in top 5 export sectors in India
are summarised and then analysed. They are further classified into 4 major
categories like Awareness, Actions, Risk / Opportunity perception and Market
Behaviour. 66% companies are still not ready and competitive enough to face
challenges due to global policies on climate change. On the basis of positive
feedback, there is moderate correlation between Awareness, Action taken and Risk /
Opportunity. So if company’s feedback is positive for any 1 of these 3 categories
(e.g. Awareness) then it might result into corresponding positive action in other 2
categories (i.e. Action and Risk/Opportunity) for climate change initiatives. On the
basis of negative feedback, Only Action taken is moderately correlated with
Awareness, Risk / Opportunity and market Behaviour which implies that if company
do not take any action, it might be result of non-awareness, unable to find any risk /
opportunity and due to uncooperative market behaviour regarding climate change.
4.1 Summary of Responses
36 Responses of companies in top 5 export sectors in India for FY 2009-10 are
summarised on the basis of questions asked and then analysed as per 4 mentioned
categories like Awareness, Actions, Risk / Opportunity perception and Market
Behaviour.
Summary of Responses:
1. 80% of surveyed companies believe that climate change and global warming will
have effect on their organisation.

46. Figure 10: Q1- Effect of Climate change
2. 50% of respondents have taken action regarding climate change. Some of these
actions are use of energy efficient equipments, use of scrubber towers, residual
water treatment and effluent treatment plant. Remaining 50% who has not taken
action, majority of them still not believe necessity of such action in future.
Figure 11: Q2 - Measures taken by Company
Table 2: Q3 - Positive Feedback to Q2
Q3: If yes, briefly explain how you are doing it?
We have installed green equipments in our new building so as to reduce the emission of GHG'
s
and save on energy costs.
We have tried to make our operations Eco-friendly by installing solar energy systems, rain water
harvesting initiatives.

47. Carbon Footpint assessment is already underway and the internal employees are being made
aware of that.
By destroying chemicals & gases - following environmental norms regarding chimney height.
We neutralize the acid & other chemicalwaste with the help of ETP plant.
Scrubber towers, ATPC plant, Employee awarness about the Global warming. - Using CFL
Figure 12: Q4 - Negative Feedback to Q2
3. Only 8 respondents are aware of government policies regarding climate change.
Some of the responses are regulations of MPCB (Maharashtra pollution control
board), SEZ norms, national action plan for climate change etc.
Figure 13: Q5 – Awareness of Policies

48. Table 3: Q6 - Positive Feedback to Q5
Q6: If yes, please mention what are they?
National Action Plan for climate change from GoI Voluntary Emission cuts by India Solar
Energy mission of GoI
Clean Development Mechanism -Maharashtra pollution control board Maharashtra Pollution
Board Maharashtra Pollution Control Board Green Industry Business Excellence Model - Rio
Tinto
(Miners) Certification - regulations (Seepz Authority) - Safety Council License from MPCB
4. 26 companies believe that there would be no or marginal risk or opportunity as far
as climate change is concerned. Major challenges or opportunities identified by
companies are technology improvement, government subsidies and SEZ
regulations, and process / product improvement
Figure 14: Q7 - Major Challenges

49. Table 4: Q8 - Positive Feedback to Q7
If yes, what can be the possible challenges or opportunities?
There are many opportunities in terms of Renewable energy generations
Government is providing a lot of subsidy for production of Solar, wind and other non-conventional
energy sources
Lot many oppotunities Technology for corrosive & hazardous materials
Challenges in terms of increased cost of raw material due to less productivity caused by global
warming.
Government Policies forcing for modernization Upgradation of Techniques
As per givernment regulation
Blackish silver due to presence of moisture - Seepz Regulation
5. 66% of surveyed companies believe that absence of proactive action on carbon
management will affect their competitiveness.
Figure 15: Q8 - Impact on Competitiveness
6. A carbon footprint measures in a detailed manner on how much of GHG gasses
are emitted directly or indirectly in manufacturing of your product. This is directly
related to energy use and thus money. 32 out of 36 companies’ customers have not
asked companies about carbon footprint or sustainability parameters. Although 50%
of them believes that such situation will arise in next 2 years

50. Figure 16: Q9 – Stakeholders’ reaction
Figure 17: Q10 - Negative Feedback to Q9
7. Border Tax is a mechanism where the importing country will have some
benchmark for each product being imported. The exporter will have to declare (in a
verifiable way) the carbon footprint of the landed product. Based on the difference in
the Footprint and Benchmark a Border Adjustment tax will be imposed. Only 6
respondents heard of Border Tax Adjustments for carbon, out of which 66% believe
that this will not affect them in future

51. Figure 18: Q11 - Awareness about Border Tax Adjustment
Figure 19: Q12 - Positive Feedback to Q11
8. Carbon disclosure project (CDP) and Global reporting initiative (GRI) are the world
leading voluntary reporting initiatives and very well respected in the investing and
lending and investing community. But only 5 respondents heard of CDP and GRI
activities.

52. Figure 20: Q13 - Awareness of CDP and GRI
9. 19% of survey companies say that lending institutes will charge higher interest
rates to less sustainable companies.
Figure 21: Q14 - Sustainability
10. 50% of respondents want to measure carbon footprint under initiatives like
carbon disclosure project (CDP) and global reporting initiative (GRI)

53. Figure 22: Q15 - Reporting of Carbon Footprint
11. Due to majority of small scale raw material suppliers, 32 out of 36 surveyed
companies do not ask their raw material suppliers regarding sustainability and
environmental record. But in view of global policy changes regarding climate change,
31% of them are intend to this in future
Figure 23: Q16 - Stakeholders' Reaction

54. Figure 24: Q17 - Negative Feedback to Q16
12. 59% respondents believe that if they implement sustainable manufacturing then
that will help them to grow in market and improve their margins
Figure 25: Q18 - Sustainability

55. 4.2 Awareness of sector companies regarding climate change
Awareness regarding climate change includes information regarding government
and global policies regarding climate change. Although majority of respondents (29
out of 36) agrees to the fact that climate change and global warming will affect their
organisation but less than 10 are aware of government policies, Border tax
adjustment, carbon disclosure project (CDP) and global reporting initiative (GRI)
Table 5: Awareness
Questions 1 5 11 13 TOTAL %
Negative 7 28 30 31 96 67%
AWARENESS
Positive 29 8 6 5 48 33%
Total 36 36 36 36
Q1: Do you think the climate change and global warming will have any effect on your organization?
Q5: Are you aware of any policies of the government with regards to Climate Change & GHG' reductions?
s
Q11: Have you heard of Border Tax Adjustments for carbon being proposed in the US and EU?
Q13: Have you heard of Carbon Disclosure Project (CDP) and Global reporting Initiative?
Figure 26: Awareness

56. 4.3 Actions taken by sector companies regarding climate
change and sustainability
Companies take action for reducing pollution either to follow government norms or as
a measure to improve efficiency or to be better sustainable company in comparison
with their competitors. 50% of respondents have taken action regarding climate
change. Some of these actions are use of energy efficient equipments, use of
scrubber towers, residual water treatment and effluent treatment plant. Remaining
50% who has not taken action, majority of them still not believe necessity of such
action in future. 18 companies want to measure carbon footprint. While currently only
4 are asking suppliers regarding their environmental record, 18 more are planning to
ask them in future
Table 6: Action
Questions 2 4 15 16 17 TOTAL %
Negative 18 15 18 32 22 105 66%
ACTION
Positive 18 3 18 4 10 53 34%
Total 36 18 36 36 32
Q2: Has your company taken any measures to ascertain the GHG emissions from its operations?
Q4: In case you are not doing it will you want to do it the next
Q15: Would you want to measure your carbon foot print and report it?
Q16: Do you ask your suppliers about their Sustainability and environmental record before purchasing from them?
Q17: If no, do you intend do this in future?
Figure 27: Action

57. 4.4 Risk or Opportunity perceived by sector companies
regarding climate change
Companies can use climate change mitigation tools as opportunity to take
competitive advantage over their competitors. In exactly opposite case same can be
perceived as risk when competitor takes proactive action regarding climate change.
Although 26 companies believe that there would be no or marginal risk or opportunity
as far as climate change is concerned but 24 companies believe that it will affect
their competitiveness in absence of proactive action. Major challenges or
opportunities identified by companies are technology improvement, government and
SEZ regulations, and process / product improvement. 29 companies believe that
lending institutes will not charge higher interest rate to less sustainable companies
while 21 companies believe that sustainable manufacturing will lead to increase in
margins and growth of companies.
Table 7: Risk or Opportunity
Questions 7 8 12 14 18 TOTAL %
RISK OR
Negative 26 12 4 29 15 86 57%
OPPORTU
Positive 10 24 2 7 21 64 43%
NITY
Total 36 36 6 36 36
Q7: Do you see any major challenges or opportunities in this regard?
Q8: What would be impact on your competitiveness in the market if you don’t take proactive action on Carbon Management
and Sustainability?
Q12: If you know Border tax adjustments then do you think it will affect you?
Q14: Do you think that investors, banks and funding agencies will charge higher interest rates to less sustainable companies?
Q18: Do you think if you were to sustainably manufacture product, it will help you grow your market and margins?

58. Figure 28: Risk / Opportunity
4.5 Market Behaviour regarding climate change and
sustainability
Market behaviour corresponds to external factors like consumer side or supplier side
requirement that may force companies to take action regarding climate change.
Majority of companies’ customers have not asked them regarding carbon footprint or
sustainability parameters. Although 50% of them believes that such situation will
arise in next 2 years
Table 8: Market Behaviour
Questions 9 10 TOTAL %
MARKET Negative 32 16 48 71%
BEHAVIOUR Positive 4 16 20 29%
Total 36 32
Q9: Have your customers asked you to report your Carbon Footprint or Sustainability parameters?
Q10: If no, then do you think that this situation may arise in another 2 years?

59. Figure 29: Market Behaviour
4.6 Correlations
Using SPSS as a tool, we have tried to find out Correlation between 4 major
categories i.e. Awareness, Action, Risk / Opportunity and Market Behaviour on the
basis of nature of responses i.e. Positive feedback or Negative feedback. Correlation
checks that how much 1 variable is dependent on other.
4.6.1 Correlation on the basis of positive feedback
On the basis of positive feedback, there is moderate correlation between Awareness,
Action taken and Risk / Opportunity. So for positive feedback, there is 35%
correlation which implies that awareness about climate change will result into
corresponding action taken. Also there is 39% correlation which implies that
Awareness about climate change will result into corresponding spotting of risk or
opportunity regarding climate change. There is 56% correlation which states that if a
company has already taken any action to mitigate pollution then that will result into
spotting of risk or opportunity regarding climate change.
Table 9: Correlation on the basis of Positive Feedback
SPSS
Correlation on the basis of Positive Feedback
Awareness_Yes Action_Yes Risk_Yes Market_Yes
Spearman's Awareness_Yes Correlation 1 0.35462358 0.38726783 0.23787808

60. rho Coefficient
Sig. (2-tailed) . 0.033823898 0.01962264 0.1624
N 36 36 36 36
Moderate Correlation
Correlation Action_Yes Coefficient 0.35462358 1 0.56394103 0.14954815
Sig. (2-tailed) 0.033823898 . 0.00034106 0.38400959
0.3 to 0.7
N 36 36 36 36
Correlation
Risk_Yes Coefficient 0.387267832 0.563941031 1 0.09204624
Sig. (2-tailed) 0.019622638 0.000341056 . 0.59339527
N 36 36 36 36
Correlation
Market_Yes Coefficient 0.237878076 0.149548152 0.09204624 1
Sig. (2-tailed) 0.1624 0.384009587 0.59339527 .
N 36 36 36 36
4.6.2 Correlation on the basis of negative feedback
On the basis of negative feedback, Only Action taken is moderately correlated with
Awareness, Risk / Opportunity and market Behaviour. So for negative feedback,
there is 39% correlation which implies that no or superficial Awareness about climate
change will result into not taking any action regarding climate change. There is 54%
correlation which states that if a company has not taken any action to mitigate
pollution then they will not able to find any risk or opportunity regarding climate
change. Also there is 33% correlation which implies that due to non-readiness of
market (Customer side) for climate change initiatives there will be no action taken by
company for climate change.
Table 10: Correlations on the basis of Negative feedback
Correlations on the basis of Negative feedback
Awareness_No Action_No Risk_No Market_No
Correlation
1 0.21867069 0.2084322
Spearman's rho Awareness_No Coefficient
Sig. (2-tailed) . 0.016317777 0.20009069 0.22249884
N 36 36 36 36

61. Correlation
1
Action_No Coefficient
Sig. (2-tailed) 0.016317777 . 0.00066843 0.04560503
N 36 36 36 36
Correlation
0.218670688 1 0.17059924
Risk_No Coefficient
Sig. (2-tailed) 0.20009069 0.000668428 . 0.31983934
N 36 36 36 36
Correlation
0.208432204 0.17059924 1
Market_No Coefficient
Sig. (2-tailed) 0.222498841 0.045605027 0.31983934 .
N 36 36 36 36
4.7 Readiness of Sector Companies
As per the following exhibit, only 33% of surveyed 36 companies are aware about
policies regarding climate change. 34% of surveyed companies have taken action
regarding climate change and sustainability. 58% companies do not find any
opportunity or risk as far as climate change is concerned. 71% of respondents
believe that market is not ready for changes due to global policies on climate
change.

62. Table 11: Readiness and Competitiveness
4.8 Conclusion
Majority of companies are not ready and competitive to face the challenges due to
global policies on climate change. As pointed out by company representatives,
organisation will definitely take actions regarding climate change only when mandate
regarding climate change from government is strictly employed and stringently
monitored on periodic basis. Like Walmart, when all customers will ask regarding
sustainability report of manufacturers and with imposition like Border Tax
Adjustments that will definitely push Indian companies in export categories to follow
global norms regarding climate change and sustainability.
Currently Companies are giving priority to process improvement which is leading to
pollution reduction due to improve efficiency. Goal of ‘Being Green’ will be achieved
only when pollution reduction will be cause for improvement rather than effect. As
more companies are inclined to measure carbon footprint so then can participate in
carbon disclosure project (CDP) and global reporting initiative (GRI) activity, this is a
positive sign towards climate change initiative.

63. As actions taken towards climate change by companies is significantly dependant on
awareness about climate change, finding future opportunities, development of action
plan and market behaviour, companies need to analyze steps taken towards climate
change, not only for them but also for their competitors to become ready and
competitive enough to face the challenges due to global policies towards climate
change.