The Role of the Private Sector in Achieving the 1.5°C Target: From Commitment to Action

A Threshold We Cannot Afford to Cross

The 1.5°C target is not a negotiating position — it is a scientific boundary. Beyond it, the consequences cascade: intensified cyclones along India’s eastern coastline, glacial retreat in the Himalayas threatening freshwater security for hundreds of millions, declining agricultural productivity, and the accelerating displacement of coastal communities. The Intergovernmental Panel on Climate Change (IPCC) has been unequivocal: limiting global warming to 1.5°C above pre-industrial levels requires rapid, far-reaching, and unprecedented transformation in all sectors of the economy.
The Paris Agreement, adopted in 2015 and ratified by India in 2016, set this ambition at the heart of global climate governance. It established a framework of Nationally Determined Contributions (NDCs), requiring each signatory to define and progressively strengthen their climate commitments. But here lies a fundamental truth that policymakers and civil society have increasingly come to recognise governments alone cannot close the emissions gap. The private sector — which drives most of the global economic activity, employs the bulk of the workforce, and shapes the trajectory of industrial transformation — is not a supporting actor in this story. It is the lead.

The Global Framework: What Corporate Relevance Looks Like in 2026

The global climate architecture has matured considerably since Paris. Net-zero by 2050 has become the benchmark for credible long-term climate strategy, underpinned by the Science Based Targets initiative (SBTi), which provides companies with scientifically grounded methodologies to align emissions reduction pathways with 1.5°C. As of 2025, over 9,000 companies globally have committed to or validated science-based targets — a signal that the private sector is increasingly internalising the physics of the climate crisis.

Environmental, Social and Governance (ESG) integration has simultaneously shifted from a niche investor preference to a mainstream fiduciary expectation. Institutional investors, multilateral development banks, and supply chain partners now routinely assess climate risk as material risk. The Task Force on Climate-related Financial Disclosures (TCFD) framework has become the de facto standard for credible climate risk reporting, while the International Sustainability Standards Board (ISSB) has formalised global disclosure norms.

For Indian businesses operating in international value chains or accessing global capital, the message is unambiguous: climate performance is business performance.

India’s Regulatory and Policy Landscape: A Strengthening Foundation

India has demonstrated remarkable ambition in its climate commitments. The updated NDC, submitted to the UNFCCC in 2022, commits India to achieving 50% of its cumulative electric power installed capacity from non-fossil fuel sources by 2030, and to reducing the emissions intensity of GDP by 45% from 2005 levels. India’s long-term goal of reaching net-zero by 2070 — while contextualised within the country’s developmental imperatives — represents a serious structural shift.

Several regulatory frameworks now directly shape corporate climate action:

Bureau of Energy Efficiency (BEE) and the PAT Scheme: The Perform, Achieve and Trade (PAT) scheme under the BEE has driven measurable energy efficiency improvements across energy-intensive industries including steel, cement, aluminium, and textiles. The scheme’s market-based mechanism incentivises over-achievers and penalises under-performers, embedding efficiency as a competitive imperative.

The Energy Conservation (Amendment) Act, 2022: This landmark legislation introduced the Indian Carbon Market (ICM) and established carbon credit trading as a formal instrument of climate policy — a signal that India is building the domestic market architecture for a low-carbon transition.

Business Responsibility and Sustainability Reporting (BRSR): SEBI’s mandatory BRSR framework, applicable to the top 1,000 listed companies by market capitalisation, represents a watershed in corporate sustainability disclosure in India. With the introduction of BRSR Core and assurance requirements for FY 2023–24 onwards, Indian companies are now expected to report quantitatively on energy, water, emissions, and supply chain sustainability. This is not a compliance exercise — it is the foundation of corporate climate accountability.

MoEFCC and the National Action Plan on Climate Change (NAPCC): The Ministry of Environment, Forest and Climate Change continues to anchor India’s multi-mission approach to climate adaptation and mitigation, spanning solar energy, energy efficiency, sustainable habitats, and the green India mission. These missions provide the sectoral context within which businesses must operate and align.

Together, these frameworks are building a regulatory environment that increasingly rewards climate leadership and exposes climate laggards to reputational and financial risk.

What the Private Sector Must Do: Five Pathways to Impact

1. Decarbonising Core Operations

The most immediate lever available to Indian businesses is transitioning to renewable energy. India’s renewable energy trajectory — with over 200 GW of installed capacity and an ambitious 500 GW target by 2030 — makes corporate renewable procurement increasingly viable. Mechanisms such as open access solar, captive power plants, and corporate Power Purchase Agreements (PPAs) are enabling large industrials to reduce both Scope 1 and Scope 2 emissions meaningfully.

In practice: A major Indian cement manufacturer committed to sourcing 60% of its energy from renewables by 2030, reducing operational emissions intensity by over 25% in five years — demonstrating that decarbonisation and cost reduction can coexist. Alongside energy transition, investments in energy efficiency — through smart manufacturing technologies, industrial heat recovery, and building retrofits — offer high-return, near-term mitigation opportunities. The BEE’s star ratings and PAT benchmarks provide a performance framework businesses can anchor to.

2. Transforming Supply Chains and Embracing Circularity

Scope 3 emissions — those generated across a company’s value chain — typically account for 70–90% of a company’s total carbon footprint. Addressing them requires looking upstream and downstream: from raw material extraction to product end-of-life.

Indian companies are beginning to map and disclose Scope 3 emissions under the BRSR Core framework, but the more transformative opportunity lies in redesigning supply chains for resilience and low-carbon intensity. This includes engaging with supplier networks on emissions reduction, integrating recycled content into products, and designing for disassembly and reuse — the foundational principles of a circular economy.

In practice: A leading Indian FMCG company redesigned its packaging architecture to eliminate single-use plastics across its top product lines, reducing material costs while aligning with Extended Producer Responsibility (EPR) obligations under the Plastic Waste Management Rules.

3. Climate Risk Disclosure and ESG Integration

Climate change is fundamentally a risk management challenge. Physical risks — from flooding, heat stress, and water scarcity — and transition risks — from carbon pricing, stranded assets, and regulatory shifts — must be systematically assessed and disclosed. The TCFD framework and ISSB standards provide the scaffolding for this work.

Indian companies with global operations or international investors are already navigating these expectations. The progressive rollout of the BRSR assurance requirement means that domestic investors and regulators will soon demand the same rigour. Companies that move ahead of mandatory requirements will be better positioned to access green capital, attract talent, and maintain social licence to operate.

4. Innovation and Green Finance

The transition to 1.5°C is also an innovation imperative. Clean technology, green hydrogen, energy storage, precision agriculture, and sustainable construction materials are sectors where India has both developmental need and competitive potential. Companies that invest in research, development, and deployment of climate solutions are not merely fulfilling their climate obligations — they are seeding the industries of the next decade.
Green bonds, sustainability-linked loans, and blended finance instruments are increasingly available to Indian corporates willing to demonstrate credible climate strategies. The Securities and Exchange Board of India (SEBI) has developed a framework for green bonds issuance, and several Indian companies have successfully accessed international green capital markets. Aligning business strategy with a credible climate roadmap is, increasingly, the prerequisite for accessing this capital.

5. Collaborative Action: Government, Civil Society, and Peers

No company decarbonises in isolation. Sector-level transformation requires collective action — pre-competitive collaboration on common technical standards, shared infrastructure investments, and joint advocacy for enabling policy environments. The UN Global Compact’s Forward Faster initiative provides exactly this kind of platform: a space for companies to accelerate action on climate, water, gender equality, and living wage through peer accountability and shared ambition.

Challenges That Cannot Be Glossed Over

Intellectual honesty demands an acknowledgement of the genuine obstacles facing Indian businesses on this journey.

Financial constraints remain significant, particularly for mid-sized enterprises and MSMEs that form the backbone of India’s industrial supply chains. The upfront capital requirements for renewable energy transition, energy efficiency retrofits, and digital monitoring systems are non-trivial, and access to affordable green finance remains uneven.

Policy uncertainty creates investment hesitation. While India’s broad climate direction is clear, the granular regulatory landscape — on carbon markets, renewable energy open access, grid connectivity, and sector-specific standards — evolves in ways that can complicate long-term capital allocation decisions.

Data and reporting gaps are a systemic challenge. High-quality emissions data, particularly on Scope 3, is often unavailable or unreliable across Indian supply chains, limiting the credibility of corporate disclosures and the accuracy of target-setting.

Capacity constraints within organisations — from sustainability literacy in the boardroom to technical skills on the shop floor — remain a gap that industry associations, academic institutions, and initiatives like the UN Global Compact Academy must urgently address.

The Way Forward: From Islands of Action to a Continent of Impact

The gaps identified above are not reasons for inaction. They are the design brief for a strengthened public-private partnership ecosystem.

India needs a structured dialogue between industry, policymakers, and civil society to ensure that regulatory frameworks are ambitious but implementable, and that transition support mechanisms are available to companies across the size spectrum. The Indian Carbon Market, as it develops, must be designed with consultation from industry stakeholders to ensure credibility and liquidity.

The UN Global Compact’s Climate Ambition Accelerator programme offers Indian companies a pathway to set 1.5°C-aligned science-based targets with structured support — moving beyond aspiration to verified commitment. Companies that have completed the programme report not only stronger climate strategies but also deeper internal alignment on sustainability as a business priority.

At the systemic level, aligning corporate climate strategies with India’s SDG commitments creates a virtuous circle: climate action drives progress on clean energy (SDG 7), economic growth (SDG 8), industry innovation (SDG 9), and sustainable cities (SDG 11). The SDGs are not a parallel track — they are the destination that a just, 1.5°C-aligned transition must reach.

Conclusion: The Business Case for a Habitable Planet

The 1.5°C target will not be achieved by governments alone, by technology alone, or by civil society alone. It will be achieved — or it will be missed — depending largely on the choices made by business leaders in boardrooms, on factory floors, and across supply chains over the next five to ten years.

Indian businesses stand at a historic inflection point. The regulatory environment is sharpening. Investor expectations are rising. Consumer awareness is growing. And the physical reality of climate change is, for many sectors, already a bottom-line issue. The question is not whether to act, but whether to lead.

Leadership means setting science-based targets before regulators require it. It means disclosing climate risk with transparency before investors demand it. It means decarbonising supply chains before procurement standards enforce it. And it means using the convening power of industry to push for the systemic enabling conditions that make the transition possible for all — not just the well-resourced few.

India’s climate legacy — built by visionary policymakers, scientists, and entrepreneurs — now passes to a new generation of corporate leaders. The window to act with meaningful impact is narrowing. The tools, platforms, and partnerships exist. What remains is the will to move — boldly, urgently, and together.

At UN Global Compact Network India, we stand ready to walk every step of that journey alongside you.

To learn more about how your company can align with the 1.5°C pathway, explore the UN Global Compact Climate Ambition Accelerator, BRSR reporting guidance, and India’s NDC tracker.