Businesses can become more ESG-friendly by switching to biofuels for energy

 Businesses can become more ESG-friendly by switching to biofuels for energy

The use of eco-friendly biofuels in place of coal and diesel minimizes the production of toxic gases that are bad for the environment and cause global warming.

The latest warning by the society Meteorological Organization (WMO) of possible record-high global temperatures between 2023 and 2027 emphasizes the urgency of solving these concerns in a society that is already struggling with the effects of global warming and climate change. One of the wettest Julys on record occurred in 2023, and August saw most nations, including India, experience their driest and hottest months on record, raising fears about the effects of climate change. 

We confront uncertainty in food supply, heightened health risks, and a general decline in quality of life as our weather patterns grow more erratic. While everyone has a duty to do their part to slow down climate change by making eco-friendly purchases and leading sustainable lives, India's corporate sector also has a crucial role to play in setting an example by implementing environmental, social, and governance (ESG) policies. 

Companies that adhere to ESG principles are seeing a surge in investment inflows on a worldwide scale as investors look to support environmentally sensitive and sustainable firms in line with long-term objectives. ESG practices have gradually become more prevalent in India, largely due to legislative requirements. The Business Responsibility and Sustainability Reporting (BRSR) program was launched by SEBI, India's regulatory body, initially on a voluntary basis for the top 1,000 listed businesses beginning with the fiscal year 2020–21 before becoming required from 2022–23. This program pushes beyond traditional financial disclosures to comply with ethical and sustainable business practices, encouraging corporations to report on their ESG performance.  

The Companies Act of 2013 also requires that information about energy conservation be included in board of directors' reports, underscoring the significance of sustainability and openness in business practices. The number of firms disclosing their ESG performance increased from 127 in FY20 to 330 in FY22, demonstrating the significant impact SEBI's policies have had on ESG reporting in India. In line with the global movement to include ESG factors into business operations and disclosures, this increase demonstrates a raised awareness and commitment to sustainable and responsible business practices within India's corporate environment.  

By adopting new ESG criteria and making the filing of BRSR reports mandatory for the top 1,000 listed businesses in July 2023, SEBI further highlighted the significance of ethical and sustainable business practices. By ensuring that funds actually follow ESG principles and give investors clear information, these measures seek to increase transparency, accountability, and investor confidence in ESG investment.  

ESG integration into corporate operations can take many different shapes. Environmental considerations (the 'E' in ESG) are of utmost importance in their attempts to decrease their carbon footprint, greenhouse gas emissions, and overall sustainability measures. These have repercussions not just for the organization but also for the environment and future generations. Therefore, by utilizing renewable energy sources, businesses may help reduce GHG emissions and carbon footprints, with biofuels emerging as a key participant in the transition to low-carbon and sustainable corporate operations. 

Biofuels have enormous promise as a sustainable energy source, especially solid biofuels derived from organic resources like agricultural waste. They are produced through the compacting of these waste materials without the use of chemicals, binding agents, or water. By using these clean, effective pellets or briquettes to feed industrial boilers, manufacturing enterprises can lessen their dependency on fossil fuels and their environmental impact.  

First off, employing biofuels aids in resolving the issue of a lot of agricultural waste in nations like India, particularly paddy stubble, which is frequently burned by farmers and harms the environment. India produces over 500 million tonnes of agricultural waste each year, of which nearly 200 million tonnes are simply burned. By turning this waste into biofuels, pollution is decreased as well as the dependency on fossil fuels like gasoline and diesel.  

Indirect job opportunities in rural regions are also supported by the use of biofuels. Many people's livelihoods are derived on the entire process, which includes carrying biomass to factories, creating biofuels, and supplying them to end customers. This comprises farmers, biofuel producers, their employees, and laborers, encouraging microbusiness in rural areas where the only available employment opportunities are frequently in agriculture.  

Thirdly, switching to eco-friendly biofuels from coal and diesel helps preserve fossil fuels by lowering the emission of toxic gases that hurt the environment and accelerate global warming. In addition, switching from fossil fuels to the comparably cheaper biofuels can reduce manufacturing costs by at least 25%. Beyond cost savings, the benefits also take into account investor preferences for sustainability and ESG compliance. Investors have a higher regard for businesses that use biofuels, which reflects favorably on corporate culture and positions the company for future opportunities because sustainability is in line with what customers want.  

Last but not least, biofuels lessen the country's reliance on petroleum imports. This is especially important in view of recent global geopolitical changes, including Russia's actions in Ukraine, which have irreversibly altered the oil markets throughout the world. By reducing reliance on imported coal and oil, biofuels offer some protection against geopolitical threats. In conclusion, biofuels might hasten the shift and seem all but unavoidable in the quest for a greener and more sustainable future, which is necessary for India Incorporation to meet its ESG obligations.