New Delhi: The total inherent financial impact of climate risks on Indian companies in the next five years is estimated to be at Rs 7,138 billion with an average risk per company being Rs 92 billion, according to a recent report.

It added that the number of firms that identified climate-related risks with potential financial impact on businesses rose to 94 per cent this year from 88 per cent in 2019.

“Up to 63 per cent of reporting companies were able to get to the last mile of providing a financial impact figure to the risks identified,” said the report by CDP, an environmental non-profit working on a global disclosure system for investors, companies, cities, states and regions.

The numbers in the report titled ‘Building Back Greener – India Inc Demonstrates Climate Resilience’ were based on responses from 42 of 220 Indian companies -- of these 60 firms are among BSE’s top 200 -- that responded to investor requests and disclosed climate data.

The report said that out of the 220 firms under the disclosure project, 67 were large businesses and the rest were micro, small and medium enterprises. Four Indian firms have made it to the CDP A-List for the first time for their bold climate action, it added.

According to the report, the growing disclosure requirements were prompting an increase in the number of Indian businesses to wake up to the threat of climate change and commit to urgent climate action.

The report said 88 per cent of responding companies reported incentivising top management for climate related issues and 66 firms -- 99 per cent of the responding sample -- have board-level oversight of climate-related issues.

It added that Indian suppliers reported a staggering $3.2 billion in extra costs by 2026 from environmental risks.

By 2020, 52 Indian companies had prepared themselves for possible policy and regulatory changes in the future by voluntarily committing to the science-based targets initiative (SBTi), registering a significant growth of 37 per cent from 2019.

“This has put India in a leadership position among emerging economies: Second in Asia Pacific and sixth globally for being home to the most SBTi committed companies,” said the report.

The report added that 51 Indian corporates were driving India’s transition to a net-zero economy by committing to science-based targets, a significant growth of over 37 per cent from 2019, positioning India ahead of Switzerland and The Netherlands. It said that investor-driven increased market pressure was compelling companies to embed climate concerns into their economic decision-making processes.

“Data shows that Indian companies have really upped their game on climate action. This bodes well for future-proofing India’s ambitious growth plans which are manufacturing centric,” said Damandeep Singh, director, CDP India.

He added that with companies being called to opt for greater transparency, India Inc holds out hope for their counterparts by incorporating a climate-focused approach into their business strategy, despite the COVID-19 induced economic distress.