Carbon now a business, trade and credit risk factor for India Inc: Report
New Delhi, May 19
Carbon is rapidly moving beyond sustainability disclosures to become a measurable business cost, export competitiveness factor, and emerging credit-risk variable for Indian companies, according to a new report released by Rubix Data Sciences and Breathe ESG.
The report, titled 'Carbon as a Business Variable: Trade, Risk, and the Evolution of India's Carbon Market', was released on Tuesday, as India prepared to operationalise its domestic carbon market in 2026. The findings come amid rising global climate-linked trade regulations, including the European Union's Carbon Border Adjustment Mechanism (CBAM), which is already increasing pressure on export-oriented sectors such as steel and aluminium.
Rubix said carbon exposure was increasingly influencing cost structures, profitability, capital allocation, supply-chain decisions, and credit-risk assessment frameworks. Regulatory expectations from the RBI and SEBI were also pushing businesses and lenders toward deeper carbon and ESG integration.
India has been a significant player in the voluntary carbon market, with over 375 million carbon credits issued between 2010 and 2025 and a comparable share retired globally. However, the report noted that much of the value created through these credits had accrued outside India, with limited linkage to domestic emissions reduction priorities. The introduction of the Carbon Credit Trading Scheme (CCTS) and the broader Indian Carbon Market framework signalled a shift toward retaining both economic and environmental value within the domestic system.
Rubix's analysis of over 1,100 Verra-certified Indian carbon projects found that only about one-third successfully reached the registration stage. Delays related to verification requirements, monitoring costs and regulatory uncertainty had direct implications for monetisation, investor confidence and project viability.
The report warned that global climate regulations were changing trade economics. CBAM was effectively turning carbon emissions into a direct export cost for Indian industry, with spillover effects on sectors such as cement and fertilisers. Carbon efficiency, it said, was increasingly determining pricing power, competitiveness and market access.
Rubix also highlighted that carbon and energy exposure were becoming more relevant to lenders, insurers and rating frameworks. As climate disclosure expectations evolved, financial institutions faced pressure to incorporate carbon exposure into credit-risk assessment, portfolio evaluation and underwriting.
Scope 3 emissions were flagged as a major risk area, often exceeding direct operational emissions. Supplier-level carbon transparency was becoming critical for procurement, trade finance and business continuity.
"A large part of carbon risk will not sit within a company's own operations, but within its supply chain," said Mohan Ramaswamy, Co-founder & CEO, Rubix Data Sciences. He added that many businesses viewing carbon only through a compliance lens would find exposure coming indirectly through suppliers, financing relationships and export dependencies. As global markets linked carbon exposure with pricing, procurement and financing, India was entering a phase where carbon was directly connected to competitiveness and long-term commercial viability.
— ANI
Reader Comments
Interesting report. As someone who follows global trade, I see India's challenge: the EU is effectively creating a carbon tariff that disadvantages developing nations. While climate action is necessary, the transition must be just. India needs to build its own carbon market that is robust enough to be recognized internationally, otherwise we'll keep losing value to overseas verification agencies and brokers.
The stat about only 1/3rd of projects reaching registration stage is worrying 😟. So much potential carbon credit value stuck in bureaucratic delays. Our MSMEs especially will struggle with verification costs. I hope the CCTS framework includes simplified procedures for smaller players, otherwise the big corporates will corner all the benefits while the real emission reductions happen at the grassroots.
As an investor in Indian manufacturing supply chains, this report confirms what we've been seeing. We now require carbon disclosures from all Tier 1 suppliers and that's cascading down. The real risk is Scope 3 - our Indian suppliers often have no idea about their own carbon footprint. Companies that get ahead of this will have a massive competitive advantage in export markets.
My concern is that carbon markets become another financial instrument for speculation rather than actual emission reduction. Already seeing consultants and auditors charging hefty fees for carbon accounting. We need strong regulatory oversight by SEBI and RBI to ensure this doesn't become greenwashing with fancy certificates. The environmental benefit must be real and measurable.
Good that India is finally moving from voluntary to mandatory carbon markets. But the transition needs handholding for industries. Look at our renewable energy journey - we
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.