sustainability – Chasing Tales

The economics of remanufacturing

Remanufacturing is a structured industrial process where a used product (the “core”) is disassembled, cleaned, inspected, repaired or upgraded, and reassembled to at least “as‑new” performance, often with a new warranty. It differs from simple repair (which restores function) and recycling (which recovers materials) by preserving the value embedded in complex components like housings, castings, and precision parts.¹

In circular economy terms, remanufacturing is one of the highest‑value loops because it keeps products in use with minimal additional material and energy input. That makes it strategically attractive in sectors where products are capital intensive, long‑lived, and technically durable—think engines, industrial equipment, medical devices, and high‑end electronics.²

Remanufacturing reduces exposure to volatile raw material prices and supply disruptions, a growing concern highlighted in circular economy policy discussions by conserving the bulk of materials in complex products³ and reports indicate that remanufacturing can cut greenhouse gas emissions by two-thirds or more compared with producing new parts, making it economically attractive for firms facing carbon constraints or reporting obligations.⁴ This is why policies that push producers to take responsibility for products at end‑of‑life (through take‑back schemes or design requirements) naturally encourage remanufacturing models as they can extract more value from returned goods.⁴ ⁵

Economics
The economics is all about the margins for organisations:

Cost side

Production cost savings: Many empirical and industry studies show remanufacturing can reduce unit production costs by roughly 40–65% compared with making a new product, mainly by reusing major components and cutting material and energy demand. Industry examples like Caterpillar’s “Cat Reman” report remanufactured parts costing 45–85% less to produce than brand‑new equivalents while meeting the same specifications.⁶
Customer price level: Remanufactured products are typically sold at 60–80% of the price of new products, attractive enough to win price‑sensitive customers while still leaving room for solid margins.⁷
Resource and energy savings: Preserving existing components means far less raw material and process energy; some studies and industrial programs report 65–87% cuts in energy use and greenhouse gas emissions relative to new manufacture.⁸

Cost Structures

Predictable core supply, stable technical yield, and cost‑efficient operations are the most important factors in any business working in the remanufacturing sector. These can be divided into three main factors, which are then further subdivided as shown in the list below:

Core acquisition and collection: Remanufacturers must get used products back, through buy‑back programs, deposits, leasing, or authorised channels (approved distribution or collection pathways), which adds logistics, handling, and sometimes incentives to the cost base.⁹ Economic models and case studies show that profitability is highly sensitive to the “core return rate”: low or erratic returns undermine capacity utilisation and can drive up unit costs.¹⁰ Interestingly, research on “seeding” (deliberately placing additional new units into the field to increase future cores) finds that active management of core flows can increase total remanufacturing profits by around 20–40%¹⁰ in some product lines: this means the business depends on both- active new sales, and a specific life of the products which are being sold.
- From an economic perspective, the supply of cores is not an exogenous input but an intertemporal decision variable. New products placed into the market today become the core inventory available for remanufacturing in the future, linking current sales decisions to future production capacity. Formal models show that firms may rationally increase new product sales, adjust leasing terms, or subsidise returns in order to secure a predictable flow of future cores, even when short-term margins are lower. The profitability of remanufacturing therefore depends on managing a stock of recoverable products over time rather than on one-period cost comparisons. When core returns are volatile or poorly controlled, remanufacturing capacity cannot be fully utilised. Unit costs rise and the apparent economic advantage shrinks, even if average cost savings look attractive on paper.
Core quality and yield: Not all returned products are economically remanufacturable; if too many cores fail inspection or require heavy rework, the effective cost advantage shrinks.¹⁰ Models that combine technical constraints with cost and collection rates show that limited component durability and uncertain core quality can make remanufacturing unprofitable unless screened and priced correctly.¹¹
- A further economic complication is uncertainty. Unlike new manufacturing, where inputs are standardized, remanufacturing faces stochastic variation in both core quality and remanufacturing cost. Inspection and testing therefore act as economic screening investments rather than mere technical steps: firms incur upfront costs to reveal information about whether a core should be remanufactured, downgraded, or scrapped. Economic models frame this as an option-value problem, where remanufacturing decisions are deferred until uncertainty is resolved. Even when average remanufacturing costs are low, high variance in core condition can reduce expected profits and lead firms to reject a substantial share of returns. This helps explain why observed remanufacturing volumes are often lower than simple cost‑savings calculations would predict.
Process Complexity: Disassembly, inspection, testing, and reassembly require specialised skills and flexible processes, which can raise overhead relative to straight‑through new manufacturing.¹²
Overheads: Since remanufacturing has extra process steps (process complexity), overhead is often a larger share of total cost than in straightforward new manufacturing.¹³

Revenue side

Margin structure: If a new product sells for 100 monetary units and costs 70 to make, the margin is 30; a remanufactured equivalent might sell for 70–80 and cost only 30–40, producing a margin in the same range or better.⁶
New customer segments: Lower price points allow firms to address more price‑sensitive markets, geographies with lower purchasing power, or customers who would otherwise buy used or off‑brand products.⁹

A central economic tension in remanufacturing is cannibalisation: every remanufactured unit sold potentially displaces a sale of a new product. Economic models consistently show, however, that remanufacturing can increase total firm profit when it functions as a form of price discrimination rather than simple substitution. By offering a lower-priced remanufactured product, firms can capture demand from customers with lower willingness to pay who would otherwise buy used, grey-market, or competitor products, while preserving higher margins on new products for less price-sensitive customers. In this equilibrium, remanufactured products expand the market rather than erode it, provided the price gap between new and remanufactured goods is carefully managed. This logic explains why OEMs often restrict remanufacturing volumes or channels even when unit margins are attractive: the optimal remanufacturing rate is determined not by production cost alone, but by its interaction with new-product pricing and demand segmentation.

Market Structures
At the moment, remanufacturing markets tend to be fragmented and dominated by many small third‑party firms, with pockets of oligopoly or even monopoly power (A monopoly is a market structure where one firm dominates the entire market supply, and an Oligopoly is a market structure with only a few suppliers in the market rather than many) around strong brands and OEM‑controlled (OEM = Original Equipment Manufacturer) take‑back systems. The exact structure depends on who remanufactures (OEM vs independent), how products are collected, and how new and remanufactured products compete in closed‑loop supply chains.¹⁴ ¹⁵

From an industrial-economics standpoint, the persistence of fragmented remanufacturing markets reflects the shape of remanufacturing cost curves. While new manufacturing often exhibits strong economies of scale, remanufacturing benefits from scale only up to a point. Input heterogeneity, variable inspection effort, and the need for flexible processes limit the gains from large-scale standardisation. As volume increases, coordination and screening costs rise, flattening the cost curve and reducing the competitive advantage of very large firms. These structural features help explain why remanufacturing markets tend to support many small and mid-sized firms alongside selective OEM participation, rather than converging toward high concentration.

In remanufacturing, market structure is usually discussed along three dimensions:¹⁶

Industry concentration: how many firms remanufacture a given product, and how large the biggest players are.
Vertical structure in the closed‑loop supply chain: which tiers (OEM, retailer, specialist remanufacturer, collector) perform remanufacturing and who controls access to cores (used products).
Horizontal competition: how new and remanufactured products compete (prices, perceived quality, channels), often modeled with monopoly, duopoly or oligopoly game‑theoretic frameworks.

These structures are shaped by cost savings from remanufacturing, consumer valuation of remanufactured products, regulatory pressure, and how easy it is to access used products (cores).

Empirical industry structures¹⁶
Across sectors such as automotive parts, industrial machinery, electronics and heavy equipment, studies and market reports converge on a broadly fragmented structure with a long tail of small non‑OEM remanufacturers and a smaller number of large OEMs and global service providers.

Key empirical patterns:

Automotive parts: global automotive parts remanufacturing is characterised as fragmented, with many regional and local remanufacturers, plus major OEM programs (e.g., engines, gearboxes, turbochargers).¹⁷
Industrial machinery and heavy equipment: growth is strong, but the market still has many specialised firms; OEMs, dealer networks and third‑party remanufacturers often coexist, sometimes in parallel closed‑loop chains.¹⁸
Overall EU/US picture: an EU‑level study notes a skewed structure with “a significant number of smaller non‑OEMs” and relatively few large OEM‑affiliated remanufacturers.

This leads to typical hybrid structures:

Many small firms competing in price and service quality for commodified parts.
Local monopolies around niche technologies or proprietary know‑how.
Regional oligopolies in popular product lines (e.g. certain automotive components).

What’s happening in India?
India’s remanufacturing story is still nascent and uneven, but it is being pushed forward indirectly by waste‑management laws, Extended Producer Responsibility (EPR) rules for e‑waste, plastics and batteries, and the historic strength of the kabadiwala / scrap‑dealer ecosystem. Most circular‑economy action on the ground still looks like repair, reuse and informal recycling rather than full OEM‑style remanufacturing, yet the latest e‑waste rules and their refurbishing‑certificate mechanism create legal hooks that remanufacturing‑type businesses can use.¹⁹ India doesn’t yet have a “Remanufacturing Act”, but multiple waste rules create incentives and legal categories that overlap with remanufacturing.

E‑waste (Management) Rules²⁰

The 2022 Rules:

Put legal responsibility on producers, manufacturers, refurbishers and recyclers of listed electrical and electronic equipment to meet quantified EPR targets for e‑waste, using a central online portal.
Require all these actors (including refurbishers) to register on the CPCB EPR portal, report flows of products and e‑waste, and obtain authorisations before operating.
Explicitly recognise refurbishing as a distinct activity: registered refurbishers can extend the life of products, send any residual e‑waste only to registered recyclers, and generate refurbishing certificates that allow producers to defer part of their EPR obligation into later years.

The 2024 Amendment Rules keep the 2022 structure but tune how the system actually works:

They add a new rule 9A that lets the central government relax timelines for filing returns “in public interest or for effective implementation”, acknowledging practical compliance bottlenecks.
They refine definitions (including “dismantler”) and insert new sub‑rules in rule 15 that allow the government to create platforms for exchange/transfer of EPR certificates and empower CPCB to set floor and ceiling prices for those certificates, tying prices to environmental‑compensation logic.

That last bit is important: it means refurbishing and recycling certificates now sit inside a semi‑regulated compliance market, rather than in a completely opaque bilateral space. For any firm doing serious refurbishment or remanufacturing of electronics, the financial value of each “saved” device is no longer just the resale price; it also includes the value of refurbishing certificates producers will need to meet their EPR targets.

One of my favourite things about waste management in India is the local kabadiwala (waste-person) system, where a person who runs a reverse-logistics business comes to people’s homes and BUYS the waste they wish to remove from their homes. The kabadiwala networks that move e‑waste and scrap in cities haven’t changed because of the 2024 amendment—but the way the state talks about integrating them has become more concrete.

Official statements on the 2022 rules repeatedly say the new EPR regime is meant to “channelize the informal sector to the formal sector”, by making collection and processing possible only via registered producers, refurbishers and recyclers.²¹ Circular‑economy concept notes for municipal waste still highlight that informal workers and kabadiwalas do the heavy lifting of collection and separation, and must be integrated into contracts, data systems and formal infrastructure.²² Case studies on informal e‑waste collectors (kabadiwalas) emphasise that they remain the primary collection channel for household e‑waste, but usually sell to small dismantlers who operate outside the 2022–2024 EPR framework.²³

Against that backdrop, the 2022–2024 e‑waste regime offers two big levers for integration:

Partnerships between registered refurbishers/recyclers and kabadiwala networks: the law doesn’t mention kabadiwalas by name, but nothing stops a registered refurbisher from building sourcing and sharing arrangements with informal collectors, bringing their material into the formal portal system.²⁴
Data and platform logic: the new certificate‑trading platforms and CPCB portals are building a data spine for reverse logistics; if cities and social enterprises plug informal actors into that spine, kabadiwalas become the front‑end of a traceable, compliance‑generating remanufacturing pipeline instead of sitting outside it.²⁵

In practice, though, most of what happens today is still repair, cannibalisation for parts, and low‑value recycling. The regulatory architecture is now sophisticated enough to support high‑value remanufacturing and refurbishment at scale, but the hard work is social and institutional: defining quality standards, building trust in “remanufactured” products, and finding ways to bring kabadiwalas and other informal workers into those new value chains without erasing their livelihoods.

Sources

Materiality

Information is considered material if its inclusion or exclusion could significantly affect stakeholders’ judgments. In accounting, it is a concept from Generally Accepted Accounting Principles (GAAP) that asks whether omissions or misstatements in financial reporting would influence the economic decisions of users.¹ ² This is often called the Materiality Threshold, or the limen at which financial information becomes significant enough to potentially influence the decisions of users of financial statements, such as investors, stakeholders, or auditors. Both quantitative and qualitative factors are involved in setting and applying these thresholds, and there is substantial professional judgment involved.³

Materiality Thresholds² ³
Quantitative thresholds provide a numerical basis for determining whether a misstatement or omission is material or not. For example, a company may decide that if an incident affects their gross revenue by 1%, they will inform stakeholders about it. That percentage can be anything that the company decides, for instance, their threshold may be 5% of post tax net profits, or 3% of EBITDA, etc.

Qualitative thresholds reflect circumstances where the nature or context of an item makes it significant, even if the amount involved is not large, and typical examples include information that may lead to a different rating by analysts if they knew about it, information that will affect whether the organisation has to comply with different regulations (say a small change in numbers that would lead to an Indian company needing to comply with Section 135 of the Companies Act, 2013, which prescribes the quantitative floors for which companies must participate in mandated CSR). Other issues that may be considered are likely to be changes in earnings trends, changes in key ratios, anything that has an impact on the company’s reputation, or any other situation that involves a change in stakeholder risk perception.

Materiality thresholds ensure financial information is decision-useful for stakeholders. Regulatory frameworks require professional accountants and auditors to apply judgment and not just formulas in deciding what is material. This ensures that both the letter and spirit of decision-useful disclosure is respected for investors and other users

Another thing to note is that material issues are not static- they change over time with shifts in business models, regulations, stakeholder expectations, or major events.

Materiality in ESG⁴ ⁵
Materiality in ESG determines which sustainability topics are most relevant not just to financial stakeholders, but to broader stakeholder groups including employees, communities, regulators, and civil society. Unlike accounting, ESG materiality often considers both quantitative metrics (such as emissions, water use, or injured employees per year) and qualitative factors (like reputation, regulatory compliance, or community relationships).

Double Materiality⁶ ⁷
Double materiality means looking at two types of materiality while making decisions:

Financial Materiality: how ESG issues impact the company’s finances and operations; and
Impact Materiality: the company’s influence on the environment and society, such as its carbon footprint, labor practices, or community impact (even if those impacts do not affect financial performance).

Materiality assessments allow organisations to understand which matters are important, or material, for their stakeholders.

How to do a Materiality Assessment⁸ ⁹
Frameworks like SEBI’s BRSR in India or the EU’s CSRD mandate ongoing materiality assessments and transparent disclosures for regulated companies, and they also want to know how the company has determined what is material.¹⁰ ¹¹ ¹²

Define objectives and scope: why is the assessment being done?
Identify and prioritise stakeholders: list all stakeholders, map how they are affected by the issue or project, and for each, explain how they can influence the company.
List potentially material topics: make a list of all topics that are material for the company and the different stakeholders (whether for financial or ESG materiality assessment).
Stakeholder engagement: understand through discussions, interviews, questionnaires, or any other such participative method what different stakeholders think about the issues at hand.
Materiality matrix: Score and rank topics by their importance to stakeholders (vertical axis) and their impact on the business (horizontal axis). The most important issues will naturally find themselves at the top right of the matrix, and the visual display will help prioritise the critical issues. At this point, it is important to understand whether the issue is time critical or issue critical, or both. Once you do have a handle on this, you can act on the most crucial matters.
Review: Review your findings, make any corrections as required- for example, perhaps there is a vocal stakeholder who is not as important in the scheme of things for your company, but a quiet one who is very important, so adjust your findings accordingly.
Act: Now you have your reporting priorities sorted, so go ahead and report. Make sure to review your materiality matrix annually, or whenever anything out of the ordinary occurs (if it requires an EGM, it also requires a review of your matrix).

Here’s an example of materiality matrix:

Materiality matrix of a hospital group:

Topic	Stakeholder Interest	Business Impact	Example/Notes
Patient Safety and Quality	Very High	Very High	Reduction of harm, regulatory compliance, central to brand trust
Data Security & Patient Privacy	Very High	High	Digital records, ransomware risk, GDPR/HIPAA provokes stakeholder concern
Affordability & Access to Care	High	High	Press, patient, regulator & government pressure for inclusive access
Staff Wellbeing & Retention	High	High	Burnout, turnover, COVID-19 impact, unionization risk
Infection Prevention	High	High	COVID-19, MRSA, and other healthcare-associated infections
GHG Emissions/Energy Use	Medium	High	Hospital operations, energy/waste, regulatory/PR risk
Responsible Procurement	Medium	Medium	Ethical sourcing of drugs, equipment; supply chain resilience
Community Health Initiatives	High	Medium	Vaccination, awareness programs raise reputation, stakeholder goodwill
Diversity, Equity & Inclusion	Medium-High	Medium	Workforce diversity, bias reduction, EEO/anti-discrimination focus
Medical Research Ethics	Medium	Medium	Consent, transparency, clinical trial reputation
Water Use & Waste Management	Medium	Medium	Medical waste, recycling, water conservation efforts

Hospital group materiality matrix

Pitfalls
While doing the above, make sure to avoid the most common pitfalls, which are:

Not involving external stakeholders (relying only on internal voices leads to bias).
Poor documentation or lack of transparency in why and how topics were prioritised.
Treating materiality as a one-off exercise instead of reviewing it annually or when major events occur.
Not linking materiality to company strategy; using it only for reporting/compliance, not real decision-making.

Embedding materiality into an organisation’s core functions protects it from Financial and ESG related risks (I just call them FESG in my head nowadays), and using materiality-informed strategy will lead to better-than-competition, more resilient long term performance, as well as improved reputation: materiality is the bedrock of value creation and risk avoidance. This is why organisations should pay attention to it.

Sources

Environmental Management Systems and ISO 14001

EMS
An Environmental Management System (EMS) is a structured framework that helps organisations systematically identify, manage, control, and continuously improve their environmental impacts across all business activities, products, and services. It is a comprehensive set of policies, procedures, processes, and practices that work together to ensure environmental considerations are embedded into daily operations and long-term strategic planning.¹ ²

EMS’ follow the Plan-Do-Check-Act (PDCA) cycle, which is a four-step management methodology designed for continuous improvement of processes, products, and systems.³ It was originally developed by American engineer and business theorist William Edwards Deming, and is now used ubiquitously in quality management processes. The PDCA cycle is an iterative, continuous loop that involves the following processes:³ ⁴

Plan– The planning phase serves as the foundation of the entire cycle, focusing on identifying problems, analyzing current situations, and developing strategic solutions.
Do– The implementation phase involves executing the planned solution, typically on a small scale initially to test effectiveness without disrupting operations.
Check– The evaluation phase focuses on analysing results and comparing them against the objectives set in the Planning phase.
Act– This involves taking corrective action based on evaluation findings in the Check phase and standardizing successful changes.

This method basically establishes a repeatable, auditable improvement loop.

Essential elements of an EMS⁵ ⁶ ⁷

Environmental policy- a policy document (paper or digital) that has clear organisational policies should be accessible to employees, and other stakeholders. It must be endorsed by the company leadership. The company must make sure employees are AWARE that such a policy exists.
Compliance register- a document or database tracking every relevant regulation, its requirements, and the actions the company takes to ensure ongoing compliance.
Defined responsibilities- roles for EMS-related activities should be clearly assigned.
Baseline- improvements can only be measured against a baseline, so these should be established clearly for each KPI.
Staff training and communication- staff must know their duties and understand why EMS is important to the organisation. It is also useful to know how to communicate these activities to external stakeholders.
Standard Operating Procedures (SOPs)- SOPs that set out each step of each activity must be available to every employee involved in anything risky, such as dealing with chemical or medical waste disposal.
Environmental aspects- these are the organisation’s activities, products, or services that can interact with the environment.
Environmental impacts- positive or negative changes to the environment due to the organisation’s environmental aspects.

ISO 14001⁸ ⁹ ¹⁰
ISO 14001 is the world’s most widely used international standard that specifies the requirements for an effective EMS. It provides a repeatable framework organizations can follow to design, implement, maintain, and continually improve their EMS, rather than prescribing specific environmental performance thresholds. Organizations can implement ISO 14001 voluntarily and may optionally pursue third-party certification to demonstrate conformity. ISO 14001 is designed to integrate with other management standards (e.g., ISO 9001 quality, ISO 45001 safety) and aligns with PDCA for continuous improvement. Please understand, CERTIFICATION VERIFIES THE SYSTEMS AND PROCESSES THE ORGANISATION IS IMPLEMENTING, NOT THE OUTCOME: that is, ISO 14001 clause 6.1 simply states that any EMS should:

“Give assurance that the environmental management system can achieve its intended outcomes;
Prevent or reduce undesired effects, including the potential for external environmental conditions to affect the organisation; and
Achieve continual improvement.”

Organisational context¹¹ ¹²
According to clause 4 of ISO 14001:2015, organisations are required to identify issues, trends, and conditions both inside and outside the business that impact environmental performance, risk, and opportunities, sort of like a very specialised PESTEL analysis. This means they must consider not only direct environmental impacts caused by them, but also how environmental conditions might affect operations, stakeholders, and their own compliance obligations.

There are three types of organisational contexts:

Internal context- Organisational policies, values, resources, processes, products or services, strategic goals, and how company culture or capabilities affect environmental responsibility.
External context- Legal, regulatory, political, economic, social, and technological factors as well as broader environmental conditions or requirements from stakeholders like customers, regulators, and communities.
Environmental context- Specific environmental conditions such as climate, resource availability, and pollution levels that can impact or be impacted by the organisation.

EMS and ISO 14001⁷
ISO 14001 defines the requirements for an EMS. It sets out the clauses and controls policy, planning, operations, evaluation, and improvement that an EMS must include. Organizations use it to structure their EMS consistently and audibly. A functioning EMS can be audited for conformity to ISO 14001. Passing an external audit earns ISO 14001 certification, which signals to stakeholders that the EMS meets international best-practice requirements. However, certification verifies the system; it does not by itself guarantee a particular environmental performance level.

To reiterate, “EMS” is the management system itself, and “ISO 14001” is the standard describing what that system should look like and how it should operate. An EMS can exist without ISO 14001, but aligning to ISO 14001 can improve structure, consistency, credibility, and auditability and allows optional certification.

Examples of ISO 14001 EMS KPIs

KPI Type	Example of Metrics	Description
Resource Consumption	Electricity (kWh), water (liters), gas (cubic meters) usage	Track reductions against baseline, efficiency programs
Emissions	Greenhouse gas (CO₂) emissions per unit output, pollutant PPM	Measure total carbon footprint, regulatory pollutant thresholds
Waste Management	Total waste to landfill (kg), recycled/reused waste (%)	Monitor reductions, recycling effectiveness
Compliance	Environmental incidents reported, time lost due to incidents	Track regulatory breaches, response times, corrective actions
Water Use	Water consumption per production unit	Benchmark efficiency, target reductions
Energy Mix	Share of renewable energy in total energy consumption (%)	Support sustainability and decarbonization targets
Paper Reduction	Total paper use (reams/year)	Track efficiency, digitalization efforts
Supply Chain Sustainability	% suppliers with environmental certification	Extend EMS upstream/downstream
Biodiversity Impact	Conservation measures adopted, protected hectares	Especially relevant for agriculture, mining, real estate sectors
Compliance Performance	Environmental incident frequency	Number of non-compliance reports annually
System Effectiveness	Internal audit scores and notes	How many internal audits have happened, internal audit results, non-conformities identified and closed

Aligning organisational KPIs with ISO 14001 can be challenging, so here are some helpful steps:⁸

Define environmental objectives based on environmental issues relevant to your organisation, relevant compliance obligations, and stakeholder expectations.
Select KPIs that are directly linked to each objective and ensure they are specific, measurable, and capable of showing progress toward the stated goals. For example, if an objective is to reduce waste, a KPI could be “percentage reduction in paper waste per year”.
Each KPI should be cleary measurable (e.g., total energy use per production unit, percentage of objectives met, reduction in incidents), so that they can be compared over time to be able to demonstrate improvement (or find slidebacks).
Assign responsibility for tracking each KPI to relevant team members, and make sure they are integrated into operational processes and reviewed at planned intervals (e.g., monthly, quarterly) to support the PDCA (Plan-Do-Check-Act) cycle. These jobs should be part of their expected activities, not extra work they have to do in addition to their regular workload.
Document the rationale for selecting each KPI, how they link to objectives, and keep written records of all measurements and analyses for audit preparation.

Audit Plans/ Checklists⁸
Audits can be stressful, but the ISO 14001 auditors are trained to help the people they are auditing feel at ease. Here are some points you could keep in mind while preparing for your audit:

During audits, objective evidence is crucial. Keep track of and present historical KPI data, trend analyses, supporting documents (e.g., invoices, meter readings, waste logs), internal communications, and management review meeting minutes showing the use of KPI data in decision-making.
Auditors typically look for consistency in KPI definitions, data collection methods, frequency of reviews, and whether the results inform corrective actions or continual improvement efforts.
Records of corrective or preventive actions taken in response to KPI underperformance are important audit evidence and demonstrate robust EMS systems.
Make use of dashboards, summaries, and visualisations to easily communicate KPI performance, trends, and progress toward objectives during audits.
ALWAYS HAVE OBJECTIVE EVIDENCE. Seriously.

ISO 14001:2025¹³ ¹⁴
The ISO 14001 standard is due for a revision which is expected to be published around autumn 2025, with a 12-18 month transition period. Here are some expected changes from ISO 14001:2015:

Area	ISO 14001:2015	ISO 14001:2025 Draft
Document Structure	Based on High-Level Structure (HLS)	Switches to Harmonized Structure for better integration with other ISO standards
Climate Action	Addresses sustainability broadly	Stronger focus on climate-related actions, carbon neutrality, and decarbonization
Risk Management	General approach to risks and opportunities	Enhanced guidance on proactive risk identification and lifecycle perspectives
Technology Integration	No explicit mention of digital tools	Encourages leveraging data analytics and AI for real-time monitoring
Supply Chain Focus	Basic requirements	Expanded emphasis on supply chain sustainability evaluation

So, why bother with an EMS?
While setting up an EMS does require some initial investment, the ongoing savings, risk reduction, and improved market opportunities, a functional EMS can help businesses become more profitable in several ways. By making better use of resources, such as reducing energy, water, and raw material consumption, companies can lower their operating costs. For example, switching to energy-efficient lighting or upgrading insulation often leads directly to smaller utility bills.

An EMS also helps businesses identify areas where they can cut down on waste, which not only saves money on disposal fees but can also uncover new opportunities to recycle or reuse materials, sometimes even generating additional income streams (such as through the ubiquitous kabadiwalas). By staying on top of environmental regulations and anticipating changes, companies can avoid costly fines and disruptions, making their business more stable in the long run.

Finally, implementing an EMS can improve a company’s reputation with customers, investors, and the public, often leading to new sales opportunities, increased customer loyalty, and even access to investment or partnerships that prioritize sustainability.

Sources

Indian MSMEs and ESG

The regulatory landscape for Indian MSMEs has shifted dramatically with the Securities and Exchange Board of India’s (SEBI) Business Responsibility and Sustainability Reporting (BRSR) Core framework. This framework now requires India’s largest listed companies to report not only on their own Environmental, Social, and Governance (ESG) performance but also on the ESG practices of key value chain partners—including MSMEs.¹

Scope and Coverage²

Applicability: From FY 2024–25, the BRSR Core value chain disclosure applies to the top 250 listed entities by market capitalization, with phased expansion in subsequent years.
Value Chain Reporting: Companies must report ESG data for their top upstream (suppliers) and downstream (customers) partners that individually account for 2% or more of purchases or sales, or collectively represent at least 75% of total purchases and sales by value.
KPIs: Reporting covers greenhouse gas emissions, energy and water use, circularity, and social factors attributable to the listed company’s business with each value chain partner.
Timeline: Mandatory value chain ESG disclosures begin in FY 2025–26, with third-party assessment or assurance required from FY 2026–27.
This means MSMEs that are part of the supply chains of large corporates must now demonstrate their sustainability credentials—or risk exclusion.

The Business Case for MSMEs Going Green

Continued Access to Large Corporate Supply Chains: With large companies under regulatory pressure to disclose their value chain’s ESG performance, MSMEs unable to provide relevant sustainability data or demonstrate green practices risk being replaced by more compliant competitors.
Market and Export Opportunities: Many global buyers and Indian corporates now require ESG compliance from suppliers. MSMEs with green credentials gain access to new markets, preferred vendor status, and export opportunities, especially as international regulations tighten.
Cost Savings and Efficiency: Adopting green practices—energy efficiency, waste reduction, renewable energy—reduces operational costs and improves margins, directly benefiting the bottom line.
Regulatory Preparedness: MSMEs that align early with BRSR and other ESG frameworks are better positioned for future regulations, including potential carbon taxes, border adjustments, and mandatory disclosures.
Enhanced Reputation and Financing: Demonstrating ESG leadership boosts credibility with customers, investors, and lenders, and can improve access to green finance and government incentives. Companies with strong ESG credentials often enjoy better access to financing and lower costs of capital.

Challenges Hindering MSMEs’ Green Transition³

Despite the clear benefits, MSMEs face significant barriers:

High Upfront Costs: Transitioning to green technologies requires capital, which is often scarce for MSMEs operating on thin margins.
Limited Access to Green Finance: Only about 10% of MSMEs access formal green finance, mainly due to collateral and credit barriers. A third are unaware of major schemes like ZED certification.⁴
Infrastructure Gaps: Many MSMEs, especially in tier II and III cities, rely on outdated machinery and diesel generators due to unreliable power grids.
Technological and Knowledge Constraints: Lower technological sophistication and lack of awareness about sustainability frameworks impede progress.
Opportunities on the Horizon
Sustainable practices are opening new markets and enhancing credibility, especially for MSMEs in global supply chains where environmental compliance is increasingly mandatory. For example, textile MSMEs in Tiruppur have adopted Zero Liquid Discharge systems to meet stringent European export requirements.

The Numbers⁴

Solar Adoption: By 2024, 21% of Indian MSMEs were powered by solar energy, and 31% had adopted energy-efficient machinery.
Rooftop Solar: Installations reached 11.87 GW, cutting average power bills by 30% and typically paying for themselves within three to five years.
Emission Reductions: This shift could potentially reduce CO₂ emissions by 110 million tonnes annually.
State Leaders: Textile and chemical industries are leading the transition, with Gujarat, Maharashtra, and Kerala making significant progress, and other states like Uttar Pradesh eager to join the movement.
If this momentum continues, MSMEs could contribute up to 50% of India’s 2030 renewable energy goal—a transformative impact for the nation’s sustainability ambitions.
However, not all numbers are positive: The Government of India launched two schemes to help MSMEs adopt environmentally friendly technology, the MSME GIFT (Green Investment and Financing for Transformation) Scheme, which focuses on supporting MSMEs to adopt clean and green technologies through concessional finance and risk-sharing, and the MSME SPICE (Scheme for Promotion and Investment in Circular Economy), which aims to incentivize MSMEs to implement circular economy practices such as recycling, reuse, and resource efficiency, primarily through capital subsidies. As of December 2024, MSME SPICE had assisted only six MSME accounts, with one reported beneficiary from Ahmednagar, Maharashtra. The total expenditure was ₹1.31 crore out of the ₹472.5 crore budget⁵… and as for MSME GIFT, as of July 2025, there are no published official numbers from the Ministry of MSME, SIDBI, or other government sources specifying the exact number of MSMEs that have received benefits under the GIFT scheme. The World Bank’s implementation report on the broader RAMP program (which includes GIFT) notes that as of November 2024, the program had disbursed $231 million (about 46% of the total loan) for MSME competitiveness and green technology adoption, but does not break down numbers specifically for GIFT.⁶

The Road Ahead: From Compliance to Competitive Advantage

The SEBI BRSR Core mandate is more than a compliance requirement; it’s a catalyst for a fundamental shift in how Indian MSMEs operate. Integrating ESG principles is no longer just about risk mitigation—it’s about unlocking new business opportunities, future-proofing operations, and contributing to India’s global climate commitments.

For MSMEs, the message is clear: Going green is not just good for the planet—it’s now essential for business survival and growth.

Sources

A guide to India’s legal framework for ESG

ESG stands for Environmental, Social, and Governance. ESG investing evaluates companies on non financial factors covered under any of these three categories. While many issues are multifaceted and may fall under one or more of these headings, the way to differentiate them may lie in separating into the Planet, People, and Profit maxim: E covers all issues that affect the planet, S is for anything affecting humans directly, and G (the most regulated of the three) is for corporate governance issues.

India has a web of laws, regulations, and policies that can be classified as ESG requirements or enablers (now that the acronym ‘ESG’ exists, that is). Here is a run down of some of the most prominent ones (it’s long):

I. Environmental Legal Requirements in India

1. Wildlife (Protection) Act, 1972
This Act provides a legal framework for the protection of wildlife species and their habitats, including the creation of protected areas such as national parks and wildlife sanctuaries. It prohibits hunting and trade in endangered species, and prescribes penalties for violations. The Act also empowers authorities to regulate activities within protected areas to conserve biodiversity.

2. Water (Prevention and Control of Pollution) Act, 1974
The Water Act is designed to prevent and control water pollution and maintain or restore the wholesomeness of water. Section 16 tasks the Central Pollution Control Board with setting standards for the discharge of pollutants into water bodies, monitoring compliance, and coordinating with state boards. The Act provides for the prosecution of violators and the issuance of directives to polluting entities to cease or modify operations.

3. Forest (Conservation) Act, 1980
The Forest (Conservation) Act restricts the diversion of forest land for non-forest purposes without prior approval from the central government. It aims to curb deforestation and promote sustainable forest management by requiring compensatory afforestation and environmental impact assessments for approved projects. The Act also provides for the protection of forest biodiversity and the rights of forest-dwelling communities.

4. Air (Prevention and Control of Pollution) Act, 1981
This Act establishes a regulatory framework for the prevention, control, and abatement of air pollution in India. Section 17 assigns State Pollution Control Boards the responsibility to set air quality standards, monitor emissions from industrial and vehicular sources, and enforce compliance through permits and penalties. The Act empowers authorities to close or restrict operations of polluting industries and to promote cleaner technologies.

5. Environment (Protection) Act, 1986
The Environment (Protection) Act, 1986, is India’s primary legislation for the protection and improvement of the environment. Section 3 of the Act empowers the central government to take all necessary measures to protect and improve environmental quality, prevent and control pollution, and set standards for emissions and discharges. Section 6 authorizes the government to make rules for regulating environmental pollution, covering aspects such as waste management, hazardous substances, and the preservation of ecological balance.

Key Rules under the Environment (Protection) Act:

E-Waste (Management) Rules, 2022:
These rules establish responsibilities for manufacturers, producers, and recyclers of electronic and electrical equipment to ensure environmentally sound management of e-waste. They require the implementation of extended producer responsibility, mandating producers to collect and channel e-waste to authorized dismantlers or recyclers. The amendments in 2018 further tightened collection targets and reporting obligations, aiming to reduce the environmental impact of rapidly growing electronic waste streams.
Battery Waste Management Rules, 2022:
The 2001 rules regulate the collection, processing, and recycling of used batteries to prevent hazardous lead and acid pollution. The Draft Battery Waste Management Rules, 2020, propose stricter norms for battery producers, including mandatory take-back systems and environmentally safe recycling processes. These provisions are designed to minimize environmental contamination and promote circular economy practices in the battery industry.
Bio-Medical Waste Management Rules, 2016:
These rules provide a framework for the safe handling, segregation, transport, treatment, and disposal of biomedical waste generated by healthcare facilities. They impose strict requirements on hospitals and clinics to ensure that infectious and hazardous waste does not contaminate the environment or pose health risks to the public. Compliance is enforced through regular audits and penalties for violations.
Plastic Waste Management Rules, 2016, 2021, 2022:
The rules aim to reduce plastic pollution by imposing restrictions on the manufacture, sale, and use of certain single-use plastics. They require producers, importers, and brand owners to implement extended producer responsibility, ensuring that plastic waste is collected and recycled or disposed of in an environmentally friendly manner. Amendments in 2021 and 2022 further expanded the scope of regulated items and tightened compliance timelines. The 2022 notification banned Single Use Plastics (SUPs) with effect from 01.07.2022.
Solid Waste Management Rules, 2016:
These rules set out the responsibilities of municipal authorities and other stakeholders for the segregation, collection, processing, and disposal of solid waste. They emphasize the need for source segregation of biodegradable and non-biodegradable waste, and promote composting, recycling, and waste-to-energy initiatives. The rules also mandate the inclusion of informal waste pickers into the formal waste management system.
Construction and Demolition Waste Management Rules, 2016:
The rules require generators of construction and demolition waste to segregate and store waste at source, and ensure its safe transportation to recycling facilities. They promote the recycling and reuse of debris, reducing the burden on landfills and conserving natural resources. Local authorities are tasked with establishing collection centres and monitoring compliance.
Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (amended 2019):
These rules regulate the generation, handling, storage, transportation, and disposal of hazardous wastes, including their import and export. They mandate that hazardous waste be handled only by authorized operators and in accordance with prescribed safety standards. Amendments in 2019 strengthened provisions for tracking and reporting waste movements, and aligned Indian regulations with international conventions.
Manufacture, Storage and Import of Hazardous Chemicals Rules, 1989:
These rules govern the safe manufacture, storage, and import of hazardous chemicals, requiring companies to undertake risk assessments and prepare on-site and off-site emergency plans. Facilities must notify authorities about the quantities and types of hazardous chemicals handled, and are subject to regular inspections. The aim is to prevent industrial accidents and minimize risks to workers and the surrounding community.
Coastal Regulation Zone Notification, 2019; related 2021 procedures:
The notification demarcates coastal regulation zones and restricts certain activities to protect sensitive coastal ecosystems. It sets out guidelines for permissible development, conservation of mangroves, and protection of traditional fishing communities. The 2021 procedures clarify compliance requirements and streamline the approval process for coastal projects.
Environment Impact Assessment (EIA) Notification, 2006 (and amendments):
The EIA Notification requires prior environmental clearance for specified categories of projects, based on a detailed assessment of their potential impacts. It mandates public consultations, expert appraisal, and periodic monitoring to ensure compliance with environmental safeguards. Amendments over the years have sought to balance developmental needs with environmental protection by refining project categories and timelines. A draft considered controversial was tabled in 2020 which is still under review, and nothing major has been finalised as of writing this.

6. Public Liability Insurance Act, 1991
This Act requires owners handling hazardous substances to take out insurance policies to provide immediate relief to victims of accidents. It ensures that compensation is available for injury, death, or property damage resulting from hazardous activities, regardless of fault. The Act also establishes an Environmental Relief Fund to support compensation payments.

7. Energy Conservation Act 2001 (amended 2022)
The original Energy Conservation Act, 2001 established the Bureau of Energy Efficiency (BEE) and set norms for energy efficiency in appliances, buildings, and large energy consumers. The 2022 amendment (which came into effect on 01.01.2023), establishes a legal basis for a carbon market, mandates non-fossil energy use by designated users, expands efficiency standards, and updates building codes.

8. Biological Diversity Act, 2002
The Biological Diversity Act promotes the conservation of India’s biological diversity and the sustainable use of its components. It establishes mechanisms for equitable sharing of benefits arising from the use of genetic resources, and regulates access to biological resources by domestic and foreign entities. The Act is implemented through the National Biodiversity Authority and State Biodiversity Boards.

9. National Green Tribunal Act, 2010
The National Green Tribunal Act establishes a specialized tribunal for the expeditious resolution of environmental disputes involving multi-disciplinary issues. The Tribunal has the power to provide relief, compensation, and restitution of damaged environments, and its orders are binding. It aims to ensure effective and speedy environmental justice for affected parties.

10. Policies and Schemes

Carbon Credit Trading Scheme, 2023
The Carbon Credit Trading Scheme, 2023, introduces a regulated market for trading carbon credits in India. It enables entities that reduce their greenhouse gas emissions below prescribed targets to sell credits to those exceeding their limits. This market-based mechanism incentivizes emission reductions and supports India’s climate change commitments. This scheme is now operational under the Energy Conservation Act (amended 2022).
Green Credit Disclosures (SEBI LODR, BRSR Principle 6)
From the financial year 2024-25, listed companies are required to disclose the green credits they generate or procure, as well as those of their top-10 value chain partners. This disclosure is part of the Business Responsibility and Sustainability Reporting (BRSR) framework and aims to increase transparency and accountability in corporate environmental performance.
Priority Sector Lending for Renewable Energy (RBI Guidelines)
The Reserve Bank of India’s guidelines on priority sector lending encourage banks to finance renewable energy projects by including them in their priority lending targets. This policy aims to boost the adoption of clean energy technologies and help India meet its renewable energy goals. Loans are extended to enterprises and households for investments in solar, wind, and other renewable energy sources.
Green Deposits Framework (RBI)
The Green Deposits Framework, introduced by the RBI, requires regulated entities to establish board-approved policies for the allocation of green deposits. These deposits are earmarked for financing environmentally sustainable projects, such as renewable energy, clean transportation, and waste management. The framework aims to channel financial resources into projects that contribute to environmental sustainability.

II. Social Legal Requirements in India

1. Human Rights Laws (Constitutional Provisions)
The Indian Constitution enshrines a broad range of fundamental rights that form the foundation of social legal requirements. Articles 14 to 18 guarantee equality before the law and prohibit discrimination based on religion, race, caste, sex, or place of birth, ensuring all citizens are treated fairly. Article 19 protects freedoms such as speech, association, and movement, while Article 21 guarantees the right to life and personal liberty, which courts have interpreted to include the right to livelihood and humane working conditions.

Articles 23 and 24 prohibit trafficking, forced labour, and child labour in hazardous industries, reflecting India’s commitment to protecting vulnerable populations. Article 46, a Directive Principle, directs the State to promote the educational and economic interests of Scheduled Castes, Scheduled Tribes, and other weaker sections, and to protect them from social injustice and exploitation. These provisions are supported by a range of statutes and enforcement mechanisms to ensure compliance and redressal.

2. Protection of Human Rights Act, 1993
The Protection of Human Rights Act, 1993, establishes the National Human Rights Commission (NHRC) and State Human Rights Commissions to investigate human rights violations and promote awareness. The NHRC has powers to inquire into complaints, intervene in court proceedings, and recommend remedial action to the government.

3. Labour Laws

Payment of Wages Act, 1936:
The Act mandates the timely payment of wages to workers, typically by the last working day of the month. It prohibits unauthorized deductions and provides for the resolution of wage-related disputes through designated authorities.
Minimum Wages Act, 1948:
This Act ensures that workers receive at least the minimum wage fixed by the government for different sectors and regions, preventing exploitation and poverty. It also regulates working hours, overtime pay, and conditions of work, contributing to the well-being of the labor force. Enforcement is carried out through labor inspectors and penalties for non-compliance.
Employees State Insurance Act, 1948 and Employees’ Provident Fund and Miscellaneous Provisions Act, 1952:
These Acts provide social security benefits to workers, including retirement savings, medical care, and insurance against sickness, disability, and death for workers and their families. Employers and employees contribute to provident fund and insurance schemes, which are managed by statutory bodies.
Factories Act, 1948 & Shops and Establishment Act, 1960:
These laws regulate working conditions in factories, shops, and commercial establishments, setting standards for health, safety, welfare, and leave entitlements. They require employers to provide safe workplaces, adequate ventilation, and sanitation facilities, and to limit working hours to prevent overwork. The Acts mandate regular inspections and empower authorities to enforce compliance.
Maternity Benefit (Amendment) Act, 2017:
The Act provides for six months of fully paid maternity leave for women employees, as well as additional leave for miscarriage or medical termination of pregnancy. It also requires employers to provide nursing breaks and crèche facilities for young children.
Labour Codes (2019–2020):
44 labour laws have been consolidated into four codes: Code on Wages, Industrial Relations Code, Code on Social Security, and Occupational Safety, Health and Working Conditions Code to streamline compliance, reduce complexity, and increase worker protection, including for gig and platform workers.

4. Gender and Social Equity Laws

Protection of Civil Rights Act, 1955:
Also known as the Untouchability Offences Act, this law abolishes untouchability and protects the civil rights of marginalized communities. It prohibits discrimination in access to public places, services, and employment, and provides for the prosecution of offenders.
Equal Remuneration Act, 1976:
This Act mandates equal pay for equal work for men and women, addressing gender-based wage discrimination in the workplace. It prohibits employers from discriminating in recruitment, promotion, and conditions of service on the basis of gender. The Act is enforced through labor authorities and provides remedies for aggrieved employees.
Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989:
The Act defines specific offences against members of Scheduled Castes and Scheduled Tribes, including violence, humiliation, and social boycott. It establishes special courts for the speedy trial of cases and prescribes stringent penalties to deter discrimination and atrocities. Amendments have expanded protections for women and strengthened enforcement mechanisms.
Maintenance and Welfare of Parents and Senior Citizens Act, 2007:
This Act obligates children and heirs to provide maintenance for their parents and senior citizens, ensuring their welfare and dignity in old age. It establishes tribunals for the speedy resolution of maintenance claims and prescribes penalties for neglect or abandonment.
The Transgender Persons (Protection of Rights) Act, 2019:
The Act recognizes the rights of transgender persons and prohibits discrimination in education, employment, healthcare, and access to public services. It provides for the issuance of identity certificates and mandates the establishment of welfare schemes and grievance redressal mechanisms.
Medical Termination of Pregnancy (Amendment) Act, 2021; Assisted Reproductive Technology (ART) Regulation Act, 2021; Surrogacy Regulation Act, 2021:
These laws expand access to safe and legal abortion services, regulate assisted reproductive technologies, and ban commercial surrogacy while allowing altruistic surrogacy for Indian citizens.

III. Governance Legal Requirements in India

1. Companies Act, 2013

Section 149:
This section requires certain classes of companies to have a specified number of independent directors, including at least one female director, on their boards. Independent directors are expected to bring objectivity and balance to board decisions, and to safeguard the interests of minority shareholders and other stakeholders.
Section 166:
Section 166 outlines the duties of company directors, mandating them to act in good faith and in the best interests of the company, its employees, shareholders, the community, and the environment. Directors must avoid conflicts of interest and act with due care, skill, and diligence in discharging their responsibilities.
Section 134:
This section requires the Board of Directors to prepare an annual report that includes information on the company’s financial performance, conservation of energy, and other ESG-related disclosures. The report must be presented to shareholders at the annual general meeting and filed with the Registrar of Companies.
Section 178:
Section 178 mandates the constitution of Nomination and Remuneration Committees and Stakeholders Relationship Committees for companies with more than 1,000 security holders. These committees oversee the appointment and remuneration of directors and resolve grievances of shareholders and other stakeholders.
Schedule IV:
Schedule IV sets out the code of conduct for independent directors, emphasizing their role in safeguarding the interests of all stakeholders, particularly minority shareholders. It requires independent directors to ensure the company has adequate vigil mechanisms, report unethical behavior, and balance conflicting stakeholder interests.

2. Corporate Social Responsibility (CSR) Requirements (Section 135 and Schedule VII)

Applicability and Committee Formation
Section 135 of the Companies Act, 2013, mandates that every company, including its holding and subsidiary companies, and certain foreign companies operating in India, must comply with CSR requirements if they meet any one of the following financial criteria during the immediately preceding financial year:

Net worth of ₹500 crore or more;
Annual turnover of ₹1,000 crore or more;
Net profit of ₹5 crore or more.

Such companies must constitute a Corporate Social Responsibility Committee of the Board, with at least three directors (including one independent director, where applicable). The Committee formulates and recommends a CSR policy, recommends the amount to be spent, and monitors the policy’s implementation.

The 2% CSR Spending Rule
Section 135(5) requires qualifying companies to spend at least 2% of their average net profits made during the three immediately preceding financial years on CSR activities. Net profits are calculated as per Section 198 of the Act. If a company fails to spend the required amount, the Board must specify the reasons in its annual report. Unspent amounts must be transferred to a fund specified in Schedule VII or, for ongoing projects, to a special “Unspent CSR Account” within prescribed timelines, with penalties for default.

Administrative and Reporting Requirements
Administrative overheads for CSR cannot exceed 5% of total CSR expenditure. Any surplus from CSR activities must not form part of business profits and must be reinvested in CSR. Companies must disclose the composition of their CSR Committee and details of CSR activities in the Board’s Report under Section 134(3).

Schedule VII: Eligible CSR Activities
Schedule VII provides an illustrative list of activities for CSR spending, including:

Eradicating hunger, poverty, and malnutrition; promoting health care and sanitation; safe drinking water.
Promoting education, including special education and employment-enhancing vocational skills, especially among children, women, the elderly, and the differently abled; livelihood enhancement projects.
Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; old age homes, day care centers; reducing inequalities faced by socially and economically backward groups.
Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources, and maintaining the quality of soil, air, and water.
Protection of national heritage, art, and culture, including restoration of buildings and sites of historical importance; setting up public libraries; promotion and development of traditional arts and handicrafts.
Measures for the benefit of armed forces veterans, war widows, and their dependents.
Training to promote rural sports, nationally recognized sports, Paralympic sports, and Olympic sports.
Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief, welfare of Scheduled Castes, Scheduled Tribes, other backward classes, minorities, and women.
Contributions to incubators or R&D projects in science, technology, engineering, and medicine, funded by government bodies or public institutions.
Contributions to public-funded universities, IITs, and national research bodies such as DRDO, ICAR, CSIR, and others.
Rural development projects.
Slum area development.
Disaster management, including relief, rehabilitation, and reconstruction activities.

Failure to comply with CSR spending and transfer requirements attracts monetary penalties for both the company and responsible officers.

3. SEBI Regulations (Listing Obligations and Disclosure Requirements—LODR, 2015)
The LODR Regulations, 2015, issued by the Securities and Exchange Board of India (SEBI), establish comprehensive requirements for the governance and disclosure practices of listed companies. They mandate board composition standards, including the presence of independent directors and mandatory committees such as audit and nomination committees. The regulations require prompt disclosure of material events, transparent reporting of related party transactions, and maintenance of a functional company website with investor information.

4. Business Responsibility and Sustainability Reporting (BRSR, BRSR Core)

BRSR (2021):
The BRSR framework, introduced by SEBI, requires the top 1,000 listed companies to disclose their performance on a broad set of ESG indicators, based on the National Guidelines for Responsible Business Conduct (NGRBC). The disclosures cover areas such as ethics, transparency, employee well-being, stakeholder engagement, human rights, environmental stewardship, inclusive development, consumer welfare, and policy advocacy. The aim is to promote responsible business practices and facilitate informed decision-making by investors and stakeholders.
BRSR Core (2023):
BRSR Core is a streamlined subset of the full BRSR, focusing on a core set of key ESG performance indicators tailored for the Indian context. It introduces phased assurance requirements for the top listed companies and their value chain partners, enhancing the reliability and comparability of ESG disclosures. The framework is designed to facilitate benchmarking and assurance, and to drive continuous improvement in ESG performance.

5. Anti-Corruption and Money Laundering Laws

Prevention of Corruption Act, 1988:
This Act criminalizes bribery and corruption in public and private sector transactions, prescribing stringent penalties for offenders. It empowers authorities to investigate and prosecute corruption cases, and provides for the confiscation of ill-gotten assets.
Prevention of Money Laundering Act, 2002:
The Act establishes a legal framework to prevent and penalize money laundering, requiring regulated entities to maintain records, conduct due diligence, and report suspicious transactions. It provides for the attachment and confiscation of proceeds of crime, and empowers enforcement agencies to investigate and prosecute offenders.

If you want me to add anything I’ve missed, please leave a comment about it, and I’ll work on it. Thanks.

References:

MCA eBooks and Acts
Law.Asia: ESG Compliance Overview
India Briefing: ESG Reporting Mandates
Nishith Desai: ESG Laws and Regulations
KPMG: SEBI BRSR Core Changes
The various laws in their most recent avatars that can be found on GOI websites.

Materials: Plastics

“Plastic” is the generic name of a large group of materials. Conventional plastics are made from fossil fuels, however there are now an increasing number of bioplastics available. This post will be about fossil plastics.

Plastics are organic polymers- this means that while other molecules may be added to their chemical composition if required (to create different properties), they are always composed of hydrogen and oxygen molecules.¹ Polymers are large chain-like molecules formed of smaller molecules called monomers², which may be natural or synthetic, and their chief quality of interest is that they can link together to form polymers.³ Polymers can be formed of between two and seven monomer units.³

The first synthetic plastic was invented in 1907 and called Bakelite.⁴ Since then, it is estimated that 8.3–9.2 billion metric tons of plastic were produced between 1950 and 2017, with over 400 million metric tons being produced annually in recent years.⁵

The Good

These enormous production numbers are because plastics are a highly versatile group of materials, and are used in every industry due to their properties- they are easy to mould, can be strong or flexible as required, are both electrical and thermal insulators, lightweight, durable, chemically stable and many are corrosion resistant. Their invention has been a boon to humanity in a variety of ways, an example of which is their usage in the medical industry, which has revolutionised medicine and allowed it to be accessible to many more people- from basic gloves, to prosthetics, to blood bags, plastics are ubiquitous in medicine and pharmaceuticals.⁶

Yet the medical industry is ultimately a minuscule consumer of plastic. 436.66 million tonnes (Mt) of plastics were traded in 2022, with final products alone accounting for 111 Mt.⁷ The vast majority (between 31% and 40%) of plastics are used today to package products, followed by the construction industry at ~17%, the automotive sector accounts for ~9-18% of global plastic, followed by household and consumer products which take up ~13% of the plastic produced, and electrical and electronic products with ~9%. The residual plastic, which comes to less than 10% of the total production, is used in a variety of sectors, including medical equipment, road signs, etc.⁷^{8 9}

S. No.	Name	You’ve Used This In
1	Polyethylene (PE or LDPE)¹⁰	Plastic bags, cling film for food storage, extrusion coatings, insulation for wires, etc.
	Medium-Density Polyethylene (MDPE)¹¹ ¹²	Shrink wraps, storage tanks, road blocks, traffic cones, fuel tanks, etc.
2	High-density polyethylene (HDPE)¹⁰	Pipes, construction material, insulation, plastic bottles, containers, containers for chemical preparations like shampoos and medical supplies, toys, geomembranes, fuel tanks, and swimming pool equipment are some uses.
3	Linear Low-Density Polyethylene (LLDPE)¹³	Shopping bags, dustbin liners, bubble wrap, stretch and, shrink wrap, plant pots, pipes and tubing, fluid reservoirs, automotive consoles, toys, kayaks, paddleboards, detergent containers, etc.
4	Ultra-High Molecular Weight Polyethylene (UHMWPE)¹⁰	Pipes, valves, bulletproof material, aircraft and spacecraft components, battery separators, sail cloths, helmets, Conveyor belts, etc.
5	Polypropylene (PP)^{15 16}	Food containers, bottles, plastic bags, car parts such as dashboards or bumpers, disposable syringes, surgical tools, non woven fabrics, fibre and textiles, battery cases, wire insulation, pipes, roofing material, outdoor furniture, etc.
6	Polyvinyl Chloride (PVC)¹⁷	Pipes, credit cards, IV bags, windows, clamshell and other types of packaging, rain wear, shower curtains, etc.
7	Polystyrene (PS)¹⁸	Disposable cutlery, construction material, seat cushions in cars, automotive door panels, CD cases, foam cups, shock lining in helmets, packaging, insulation material, diagnostic tools, laboratory apparatus, and other uses.
8	Polyethylene Terephthalate (PET)^{19 20}	Beverage bottles, food backaging, clothing and textile, other packaging, disposable cups, photovoltaic parts, gear housing, greenhouses, and other applications.
9	Acrylonitrile Butadiene Styrene (ABS)²⁰	There are more than 6,000 grades of ABS produced today. LEGO bricks, hutomotive parts, household appliances, consumer goods, walking sticks, 3D printing, medical devices, pipes and fittings, sports equipment, etc.
10	Polyurethane (PU)^{21 22}	Automotive components such as dashboards, mud flaps, car door panels, etc., footwear, medical materials, insulation, paint, coatings, aerospace components, agricultural products, cutting sticks, gaskets, Diablo rollers, manufacturing industries, mining, quarrying, oil and gas sectors, and other uses.
11	Polycarbonate (PC)²³	Coffee machines, food processors, automotive headlamp bezel and lenses, hair driers, construction material, surgical instruments, blood reservoirs, protect eye gears, etc.
12	Polylactic Acid (PLA)²⁴	This polymer is biodegradable, and degrates into lactic acid. Used in medical implants, food packaging, engineering plastics, drink packaging, disposable cutlery, shrink wrap, 3D printing.
13	Polyethylene Terephthalate Glycol (PETG)²⁵	3D printing filament, Consumer electronics, automotive parts, construction material, art and other customised products, etc.
14	Nylon²⁶	Ropes, automotive parts, workout wear, swimwear, rain protective wear, guitar strings, nets, and many other uses.
15	Ethylene-vinyl acetate (EVA)^{27 28}	Shoe soles, foam mats, adhesives, protective padding, solar panels, automotive interiors components like mats and cushions, sports equipment, toys, etc.
16	Thermoplastic polyurethane (TPU)²⁹	Automotive parts, animal identification tags, textile coatings, garments, adhesives, military equipment, conveyor belts, seals, and other uses.

A few commonly used plastics

The global demand for plastics has quadrupled over the past decades⁷ and the OECD suggests that under the business-as-usual scenario it is projected to triple by 2060, and of this only 12% is likely to be secondary, or recycled plastic.³⁰ The entire plastics market was valued at $712 billion in 2023 and is projected to continue growing, and thus supports millions of jobs at the moment: As of 2023, the U.S. plastics industry directly employed over 1 million people in the United States, with total plastics-related jobs (such as sales, etc. in the U.S. reaching up to 1.55 million.³¹ In India, the plastics industry comprises over 50,000 processors and employs over 5 million people directly and indirectly³². It’s also good to remember that the industry does not only consist of direct plastics manufacturing and usage, but has also made several other activities possible in other industries which would not otherwise have been possible (the example of the medical industry is discussed above), thus also adding to jobs in those sectors. In totality, it is approximated that there were 7,637,284 people employed in just the Global Plastic Product & Packaging Manufacturing as of 2024.³³

The Bad

On the flip side, this gargantuan human appetite for plastics has caused a macro and micro plastic buildup in the planet.³⁴ According to the United Nations, 51 trillion microplastic particles – 500 times more than stars in our galaxy – litter the seas. They go on to say that by 2050, oceans will have more plastic than fish 99% of seabirds alive will consume microplastic if ongoing trends of plastic pollution are not abated³⁵– and microplastics are now increasingly being found inside humans as well.^{36 37}

Plastics are now in our seafood, the air we breathe³⁸, our tap water³⁸, and even in our fetuses³⁷. In fact, a study approximates that the average adult consumes approximately 2,000 microplastics per year simply by consuming salt. But plastics being found in our systems are a new phenomenon, and therefore are poorly studied. We don’t yet know even the short term impacts of being made up, to a small extent, of our plastic- except they may just be contributing to preterm births³⁷, and hundreds of thousands of annual heart disease deaths³⁹. The OECD has stated that plastic leakage to the environment is likely to double to 44 million tonnes (Mt) annually, while the build-up of plastics in aquatic environments will more than triple, and greenhouse gas emissions from the plastics lifecycle will more than double, from 1.8 gigatonnes of carbon dioxide equivalent (Gt CO₂e) to 4.3 Gt CO₂e further aggravating environmental and human toxicity.³⁰

In 2022, only 2% of plastics produced were made from renewable sources- of the remaining 98%, 44% was derived from coal, 40% from petroleum, 8% from natural gas, 5% from coke and 1% from other sources.⁷ In 2019, plastic production amounted to 5.3% of total greenhouse gas (GHG) emissions that year, or ~2.24 billion mt of carbon dioxide equivalent. Of this, extracting feedstock fossil fuels used accounted for 20% of the 2.24 billion mt, creating monomers for 26%, and refining hydrocarbons and producing other plastic ingredients kick out 29%.^{40 41} This spotlights the first of plastic’s environmental issues- even though plastics result in lower greenhouse gas emissions throughout their life cycle compared to alternative materials like metals or glass⁷, as long as they are extracted from mineral fuels, they will continue to have an outsized impact on the planet, because most of their GHG emissions are produced not during their lifecycle as plastics, but well before they come into existence, at the extraction, monomerisation, and refining stages. Upto 70% of the fossil fuel used in plastic creation comes from the raw materials used in production, and not the electricity used in processing them.⁴² Another way to look at this is that in a 2018 study it was determined that recycled PET, recycled HDPE, and recycled PP consume 79%, 88%, and 88% less total energy respectively than producing virgin PET, HDPE, and PP⁴³– So while plastics live a virtuous life, the physical and chemical processes during their conception, birth, and post mortem are traumatic for our planet and all living beings on it.

In 2024, humans were projected to have generated 220 million tonnes of plastic waste, an increase of 7.11% from 2021.⁴⁴ in the same year, Greyparrot.ai, detected 40 billion waste objects at 55 facilities across 20 countries in North America, Europe and Asia. They tracked over 35,000 tonnes of recyclable plastics which were not recycled, and also detected clear plastic containers (like thermoform packaging), and over 7 billion flexible film objects.⁴⁵ The Alliance to End Plastic Waste estimated in 2023 that at least 360 million tonnes of plastic waste are generated annually, and of that 70% remains uncollected, or was improperly disposed off, leading to leaks into the environment, landfill dumping, open burning.⁴⁶ Researchers have estimated that ~34% of global plastic waste is incinerated, which is emerging as the most practiced method for disposal.⁷ About 40% of plastic waste is still fed to landfills (a method of disposal found to be shrinking), and only 9% is recycled.⁷

Incineration is simply the burning of waste matter, also known as Waste-to-energy (WTE), Thermal treatment, Energy-from-waste, or Energy recovery. When burnt, plastic remembers its fossil origins and generates high temperatures. The combustion is often open, without any way to capture the toxins released.⁴⁷ Without plastic as part of municipal waste, municipal waste management systems have been known to add coal⁴⁸ to the waste mix to help achieve the kind of temperatures plastic waste achieves when set fire to⁴⁹. Thus, firstly, municipal waste management plants have an incentive to encourage plastic waste (so they don’t spend on fuel/ they spend less on fuel). Waste incineration is also known to produce carbon dioxide, carbon monoxide, hydrogen chloride, sulfur oxides, nitrogen oxides, metal oxides, and metal vapours, fly ash, bottom ash, dioxins, polychlorinated biphenyls, and black carbon.⁴⁷ ⁴⁸ Contaminants also get into the soil and groundwater and frequently contain additives (such as fillers, plasticizers, flame retardants, colorants, stabilizers, lubricants, foaming agents, antistatic agents, and metals, including cadmium, chromium, lead, mercury, cobalt, tin, and zinc), in addition to adhesives and coatings.⁴⁷ In 2019 CIEL estimated that just burning plastic packaging in the open releases 2.9 Mt CO2e of greenhouse gases into air per ton of plastic packaging⁵⁰. Further, the open burning of plastics is associated with an increased risk of heart disease, respiratory issues, neurological disorders, nausea, skin rashes, numbness or tingling in the fingers, headaches, memory loss, confusion, cancer and birth defects.⁴⁷

The second method of plastic disposal mentioned are landfills. A landfill is an ecological system, where the inputs are solid waste and water, and the outputs are leachate (The liquid produced when water percolates through any permeable material) and gas produced by the joint action of biological, chemical, and physical processes. Leachate Recycling landfills are designed to capture and recycle aqueous leachate to prevent or reduce the environmental leakage of potentially harmful waste or degradation residues. Controlled Contaminant Release landfills allow the leachate to migrate to the environment under monitored conditions to prevent harmful events. Unrestricted Contaminant Release landfills, which are older waste dumps, have no controls on leachate or environmental contamination.⁵¹ There is no method of knowing what is ultimately happening inside landfills, however, due to the fluctuating temperatures (reaching as high as 60 to 90 °C) and pH (4.5–9), deep-seated fires, physical stress, and compaction, as well as limited microbial activity, landfilled microplastics are likely to continue to fragment into nanoplastics. While most polymers and plastics remain unchanged in landfills, some may degrade into further fragments or biodegrade to water and either are carbon dioxide in aerobic environments or a mixture of carbon dioxide, methane, and volatile organic compounds (VOCs) in an anaerobic environment.⁵¹

This brings us to our third plastic problem- plastic exists everywhere, including places it shouldn’t be in. Plastic litter is categorised as macroplastics (those bits of plastic detritus which are larger than 5 mm), microplastics (the infamous plastic discard sibling, coming in at <5 mm), and nanoplastics (ultrafine particles <100 nm).⁵² Macroplastics made up 88% of the global plastic waste in 2019, tallying up to ~20 million metric tons in that year. This is the plastic that breaks down into smaller bits due to physical and chemical processes- such as incineration, leaks from landfills, interations with biotic and abiotic forces, etc.⁵² ⁵³

The Solutions

In order of what I think will have the quickest impact/ be the easiest to do:

1. Clean up macro plastic waste, and fine littering.

2. Mandating superior waste sorting, so that recyclable plastics are removed from being incinerator or landfill food. This will require more than just regulation- waste segregators, whether human or AI, will have to be taught how to identify recyclable plastics, which at the moment are PET, HDPE, PP, LDPE, and PVC, with varying levels of ease⁵⁴ ^{55 56} ,and the number of recycling facilities will have to be increased around the world for all kinds of plastics.

3. Ban (or tax) single use plastics, including those that cannot be recycled (in theory all plastics can be recycled).

4. Investment in and policies to encourage biodegradable plastics.

5. Reduce consumption. Of course this will require a cultural shift, and goes against our general capitalist consumerist values, but less consumption leads to less plastic used for making, packaging, transporting, installing, using, and disposing off the product.

6. Have some compassion- plastics have made all our lives better, but especially so for disadvantaged people. This mess was created over a century, so we can take a few years to sort it out without demonising or causing problems to those who need help the most.^{57 58 59 60}

Sources:

Financing climate solutions – II: adaptation finance

Climate change adaptation finance is the gangplank between addressing constantly escalating climate threats, and our current level of climate adversity preparedness- that is, it is used to help adjust to the adverse effects of climate change, such as floods, fires, or other extreme weather events.

The UNEP’s Emissions Gap Report 2024 states that while it remains technically possible to get on a 1.5°C pathway, a failure to deliver superior results would put the world on course for a temperature increase of 2.6-3.1°C over the course of this century.¹ To achieve the pathway to limiting temperature rise to 1.5°C, the current estimates are that the annual adaptation finance gap is US$187-359 billion per year², and developed countries, that did most of the climate damage must double adaptation finance to at least $40 billion a year by 2025³.

In 2022, the total financial flows to adaptation efforts were assessed to be $32.4 billion⁴, while another approximation puts this value at $63 billion⁵, which is nearly twice the first estimate- and yet, to put our requirements into further perspective, the all nations at COP29 agreed that the all sources of finances should generate $1.3 trillion annually by 2035, less than 10 years from now⁶.

Various financial mechanisms and instruments have been devised to address the gap. Here is a brief run down of some interesting ones:

1. Results based finance/ Outcome-Based Instruments- Money is paid out only once the previously agreed results are achieved. Debt-for-climate swaps/ Debt-for-Nature Swaps- “In a debt-for-adaptation swap, countries who borrowed money from other nations or multilateral development banks (e.g., the IMF and World Bank) could have that debt forgiven, if the money that was to be spent on repayment was instead diverted to climate adaptation and resilience projects.”⁷ These are a type of Results Based Financing.

2. Blended finance- The use of cataclytic finance to increase private sector participation in climate financing.⁸ Catalytic capital—debt, equity, guarantees, and other investments that accept disproportionate risk or concessionary returns compared to a conventional investment in order to generate positive impact.⁹ For example, guarantees are an assurance by a party that they will bear all losses for a project in case any occur, so that other investors come in to finance the project. Pooled investments are another example of blended finance, where capital from different entities is combined to finance projects.⁸

3. Payment for Ecosystem Services (PES)- The beneficiaries of ecosystem services remunerate those who tend to the ecosystem in question. A hypothetical example is paying the tribespeople who live in and tend to the Amazonian forests for providing a green lung to the rest of the world.

4. Liquidity facilities- Providing loans at the time of a crisis, often at concessional rates, or deferring repayments of old debts after an extreme weather event so that the nation(s) suffering from it have adequate liquidity to help their citizens.

5. Bonds- A bond is a debt instrument which offers an interest rate in exchange for lending money to the issuer of the bond. When the issuer is a sovereign, the interest rates are usually low since it is believed that they can cover at least the nominal value of the interest and the basic capital borrowed, whereas riskier debts such as corporations must offer more attractive rates of interest.

Catastrophe bonds are bonds issued to investors by insurers or pension funds which are offered at attractive rates and cover the risk of a climate catastrophe. In case such an event occurs, these funds are called in, however in case no such disaster happens, the investors benefit from the high interest rates.

There are also a variety of sustainable bonds, such as green bonds, sustainability-linked bonds, blue bonds, etc. and are used to fund different types of climate projects.

6. Green securitisation- Securitisation is the practice of clumping various financial instruments with similar characteristics together to form a completely new instrument which can then be sold to those willing to accept the risks and rewards associated with that new instrument, and the underlying securities. If the underlying securities were originally issued for climate friendly projects, they are called “Green Securitisation”.¹⁰

These and other mechanisms are all geared towards luring private funds into covering the gaping mouth of climate change adaptation requirements. Its clear that the need is dire, however these and other climate related mechanisms still form a tine part of the global capital markets.

Sources

Biomimicry for sustainable living

Biomimicry is the process of imitating nature to achieve solutions for human problems. An example is imitating the structure of a bird’s body to create aeroplanes, thus reducing drag, noise pollution, and fuel consumption while the plane is flying. Such designs are slowly proliferating across the world in the form of material design (think velcro)¹, product design (solar cells)¹, and architectural design (The Water Cube, also known as the National Aquatics Centre in Beijing, China)².

Biomimetic designs have several advantages:

1. Resource efficiency- Biomimicry encourages resource efficiency, so that fewer materials are used, and less waste generated when such design principles are used- termite mounds used as a model for buildings, since they are naturally cooler, have led to a smaller energy footprint due to lower cooling requirement, and copying whale fins have allowed wind turbines to be upgraded to greater efficiency.²

2. Resilience- Since it is a copy of a naturally efficient design, such products or spaces are congenitally resilient and not prone to breakage or damage.

3. Regeneration- Nature is regenerative, and thus nature-inspired design is too. Harvesting rainwater can help replenish groundwater resources. Other examples include public food gardens, public green spaces, green walls, restoring damaged landscapes, etc.

4. Cradle to Cradle- Designers can aim for long product lives, scientists for increased material stability, manufacturers can take back old products and remanufacture, and governments can legislate the right to repair, as well as connecting industries as much as possible so that where possible waste from one industry may be used as raw material for another, whenever virgin material is not a requirement due to health or other concerns.

5. Innovative- biomimetic designs spur technology, human comfort, and positive environmental outcomes to newer heights. Examples include the development of super hydrophobic material inspired by lotus leaves, synthetic spider silk, antimicrobial medical devices, and many more.²

Biomimicry uses design that have been perfected over billions of years of evolution to adapt to and take advantage of the environment in which they function, and offers real world scalable solutions can address sustainable development goals. Studying and replicating these designs allows us to benefit from evolutionary specialisation and live in closer harmony with our own environment. However, there are several challenges in commercialising such designs:

1. Scalability- biology is complex and organisms are a intricate interweaving of multilayered interactions between different compounds such as proteins, lipids, muscle cells, immune systems, nervous systems, defence mechanisms, etc. producing such material is difficult in labs, let alone at scale.

2. Education- Biomimicry is not studied or taught at most schools and its principles are not well known. This limits the number of people who are able to access the knowledge of how to imitate natural beings to the few who are already interested or conversant with the matter.

3. Interdisciplinenary nature-biomimicry requires interdisciplinary cooperation. Since different professions often don’t work together unless brought together for a specific project, opportunities to create biomimic outcomes are limited unless that is the specific project aim.

4. Material stability- biological material often cannot survive outside of an organism, so creating a similar compound, or a synthetic compound that mimics it is problematic and economically unviable due to their short lifespans or inability of synthetics to perform at the same level as the biotic compounds.

5. Experimental- Such projects are uncertain by nature. There is no guarantee that the creators who set out to make a particular solution will be able to do so. There is therefore no standard business model.

6. Limited inspiration- few organisms have been studied deeply enough for humans to be able to replicate their biology and processes. Currently, it is approximated that research has focused on a mere 20 organisms.³

7. Geometry- biological molecules are incredibly small. Human labs can often not replicate the chemistry of these compounds and layers at such scales.

8. Costs- due to all the above factors, plus a lack of policy support, financing such projects is often an uphill battle.

Overcoming these challenges will require vision, time, policy support, and financing, but the returns on investment will be abundant for society, science, and sustainable development.

Sources

The path to a just transition – II

In this part of the series of posts on a just energy transition, I’ll explore what an energy transition is, and why we must achieve it.

Energy transition is simply the switch our current dependence on fossil fuels to renewable or low carbon sources for energy production. This is essential because climate change is being fueled by our dependence on mineral fuels- the use of which release greenhouse gases into our atmosphere.

Greenhouse gases are gases that trap the Sun’s heat in our atmosphere, leading to a long term warming of our planet, causing local and global weather changes that living beings on the planet did not evolve with, and also causing abiotic planetary forces to react in ways that harm life and infrastructure- for example, warmer oceans lead to more hurricanes, causing greater property damage and loss of human, animal, and plant lives.

Since these gases collect in the atmosphere, there is a build up of heat absorbing chemicals in the air over time. Carbon Dioxide in particular persists in the atmosphere fore thousands of years, which means that the CO₂ released into the atmosphere by, for example, burning coal to fire steam engines during the industrial revolution, is still blanketing us today. Other gases issued due to the combustion of fossils have shorter lifespans, but greater warming effects due to the structure of their molecules- although methane (CH₄) on average lasts in the atmosphere for less than 12 years, it’s 100 year warming potential can be between 28 to 36 times as potent as CO₂, for example¹.

Just like if the planet were to cool (and continue cooling) overmuch, a planet that is heating up is catastrophic to life and property.

In comparison, non fossil sources of energy are considered clean fuels, since they do not liberate the greenhouse gas genie into our atmosphere while operating to produce energy. Please do note that while they contribute negligible amounts to global warming while making electricity, they do contribute to it through their supply chains- that is, scope 2 and 3 emissions.

The National Renewable Energy Laboratory (NREL) reviewed nearly 3,000 published life cycle assessment studies on utility-scale electricity generation
from wind, solar photovoltaics, concentrating solar power, biopower, geothermal, ocean energy, hydropower, nuclear, natural gas, and coal technologies, as well as lithium-ion battery, pumped storage hydropower, and hydrogen storage technologies, greenhouse gas (GHG) emissions from various sources of energy to inform policy, planning, and investment decisions. Less than 15% of the studies passed the various quality and relevance checks. On studying the ones that did pass these checks, NREL came to the conclusion that the Median Published Life Cycle Emissions Factors for Electricity Generation Technologies was as follows²:

S. No.	Type of Technology	Generation Technology	Median Published Life Cycle Emissions Factors
1.	Renewable	Biomass	52
2.	Renewable	Photovoltaic^a	43
3.	Renewable	Concentrating Solar Power^b	28
4.	Renewable	Geothermal	37
5.	Renewable	Hydropower	21
6.	Renewable	Ocean	8
7.	Renewable	Wind^c	13
8.	Storage	Pumped Storage Hydropower	7.4
9.	Storage	Lithium-ion Battery	33
10.	Storage	Hydrogen Fuel Cell	38
11.	Non Renewable	Nuclear^d	13
12.	Non Renewable	Natural Gas	486
13.	Non Renewable	Oil	840
14.	Non Renewable	Coal	1001

Median Published Life Cycle Emissions Factors for Electricity Generation Technologies
a Thin film and crystalline silicon; b Tower and trough; c Land-based and offshore; d Light-water reactor (including pressurized water and boiling water) only

As can be seen in the table above, the median Emission Factor (Emission Factors are a way to understand how much GHG emissions were released due to a particular activity) for the total lifecycle Non Renewables are far greater than those of either storage or renewable technologies. These emissions are primarily released during the combustion phase for the Non Renewables, however non of the other technologies require combustion to create electricity (and neither does Nuclear Light-Water Reactor technology, resulting in the very low Median Lifecycle EF).

Global greenhouse gas (GHG) emissions grew by 51% from 1990 to 2021, and more than 75% of these emissions come from the energy sector.³ Thus it’s obvious that by switching over to sources of energy that are not carbon intensive, we will be able to target the most conspicuous source of planet warming emissions. Shifting out of non renewable sources of energy will also reduce our dependence on fossils, and diversify our energy mix and enhance global energy security (in 2022 fossil fuels provided 81% of the total energy supply globally⁴), improve global health outcomes by reducing pollution, and finally- also improve the climate outlook.

Sources

The path to a just transition – I

It is known even now the world will go through extreme climate events that cannot be avoided. Such events, caused by human activities indirectly trapping heat in our planet’s atmosphere which has already resulted in an increase of nearly 2 degrees Fahrenheit (1.1 degrees Celsius) between 1850-1900¹, are likely to include more wildfires, more floods, more hurricanes, more droughts, more heatwaves, different precipitation patterns,² seasonal changes that happen at different times than a century, or even just a couple of decades ago among other negative outcomes. Weather events are also expected to be more intense than earlier ones- that is, there will be more incidence of hotter heatwaves, hurricanes on the higher side of the scale, more intense precipitation, etc.

While many of these adverse impacts cannot be avoided any longer, we can prevent an exacerbation of these outcomes by shifting to a lower carbon economic system than what we have now. This shift from carbon intensive economic activities to an economy that is either carbon neutral (net zero) or negative is referred to as climate transition.

Our global economy is heavily reliant on mineral fuels- currently two-thirds of our fuel demand is met through fossil fuels³. In the Global Energy Review 2025, the International Energy Agency (IEA) has stated that the carbon intensity of global economic activity is the product of the energy intensity of GDP and the carbon intensity of total energy supply.⁴ That is, we first find out how much energy it takes to produce the entire world’s Gross Domestic Product, and then multiply it with the amount of carbon produced to make that much energy. This means we can slow down carbon emissions in two ways- reduce our production and consumption activities, or make sure it takes less energy to keep them at the same level they are today.

In 2019, heat and electricity production cost us 34% of the global greenhouse gas production, industry accounted for 24%, transportation 15%, and buildings 6% of the global greenhouse gas emissions in that year. It may be noted that 95% of the transportation sector runs on fossil fuels.⁵ And, in 2024, the CO₂ intensity per unit of economic activity was lower than the average improvement seen over the previous decade.⁴ So not only are we using a lot of energy to support our lifestyles, we are also failing to decrease the amount of greenhouse gases that are released into the atmosphere due to these activities.

It is clear that the change to a lower carbon economy is emergent, must be large scale, and involve every sector and industry in the global economy, including the labour markets, and therefore the communities those workers belong to. It’s a systemic shift that will affect all living beings on our planet, and cause significant human distress unless it is planned and executed with careful compassion.

“The scientific evidence is unequivocal: climate change is a threat to human wellbeing and the health of the planet. Any further delay in concerted global action will miss a brief and rapidly closing window to secure a liveable future,”

– IPCC Working Group II Co-Chair, Hans-Otto Pörtner³

Given the above, energy transition is a formidable task ahead of our species. A just transition, which distributes an equitable burden for the resources required to finance the transition among those who are wealthy and those who are not, is going to be even more challenging.

Accelerating climate actions and progress towards a just transition is essential to reducing climate risks and addressing sustainable development priorities, including water, food and human security.

-IPCC Sixth Assessment Report Working Group III: Mitigation of Climate Change⁷

The consequences of climate change affect people disproportionately- the impoverished suffer much more than those who have the resources to avoid the results of the adverse fallout of climate change. Climate change energy transitions are also going to have widespread consequences. A “just” climate transition is one where the economic burden of the transition falls on people in the proportion in which they contributed to climate change- this means that the wealthy with extravagant lifestyles bear more responsibility, and cost, for the shift to a carbon neutral or negative economy than workers who are living within a system they did not create. This also means countries which industrialised in the 1800s must answer for the greenhouse gases they pumped into the atmosphere to achieve their prosperity, and that most corporations bear greater responsibilities than most individuals.

In this series of posts, I’ll explore what the energy transition will require, how we may go about achieving it, and what we must do for the transition to be just.

Sources

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this:

Share this: