“We would like to be carbon negative by 2040.” Chief Risk Officer (CRO), Dalmia Cement, Dr. Arvind Bodhankar

In a conversation with Urvi Shrivastav, Editorial Lead, BW CFO, BW Businessworld, Chief Risk Officer (CRO), Dalmia Cement, Dr. Arvind Bodhankar speaks about the importance of balancing profits with sustainability, evolving business practices, and the impeccable track record of Dalmia Cements.

Dalmia Cement has ambitious Co2 reduction targets. How are you taking the company forward in this regard and what are the challenges?

Climate change is a risk not just for my organisation but for the entire planet. There are physical and transitional upshots of this risk. As an organisation we have decided, we would like to be carbon negative by 2040. It is a stretched target as a lot will depend on technology, policies, and to a large extent on climate finance. We have prepared a roadmap for the same. Since we have pledged for this, we have achieved a 9.8 percent reduction in our CO2 footprint. That way we have surpassed the target we have set for ourselves for the year 2025. We are also working with a lot of government and non-governmental organisations on policy and public advocacy. My role as a CRO is exciting, at the same time challenging also. I had to keep track of all climate change emerging risks, work closely with leadership as well as the operations team to develop the mitigation plan and track its implementation. In the end, I have to ensure there is no business disruption arising out of this risk.

What is Dalmia doing concerning Environment, Social, Governance (ESG) compliance?

Compliance is a bare minimum for us. We have been going beyond and disclosing our financial and non-financial performance as per the global reporting initiative requirement, as per UN Global Compax requirement, CDP, and the like. This year we will also be disclosing as per the Task Force on Climate Related Financial Disclosures (TCFD) requirement. We are one of the few companies which have been disclosing as per business responsibility and sustainability reports standard recently introduced by SEBI. We are a member of the Global Cement and Concrete Association, and we have been disclosing our performance on climate change, health and safety, and other environmental parameters as well.

How do you plan to integrate the ESG strategy with the overall strategy of Dalmia Cement?

Our leadership is quite committed to ESG, for instance, the 2040 target we have set is unique to us. This is especially true for the cement sector where there are many processes-related emissions, despite 60 percent emissions coming from fossil fuels. Given how difficult this target is, and yet we are achieving it, it shows the commitment of the management. We believe clean and green is profitable and sustainable, which has translated to our strategy. Whatever we do we look at it from the lense of sustainability and ESG.

What kind of impact will this have on Dalmia’s overall risk profile?

Due to our strategic focus on ESG, we have made the commitment not only to carbon neutral by 2040 but also commitments like ‘RE100’, that is, 100 percent renewable energy. We will double our energy productivity in 15 years’ top time, and becomes 20 times water positive by 2025, while using waste effectively. All these initiatives have improved the trust of the stakeholders in our organisation. Due to these factors, our ESG scores have improved, and help improve our risk profile as well.

What are the main economic risks faced by Dalmia Cement, and how is ESG helping mitigate these risks?

Whether it is Dalmia cement on any other company, there are some inherent risks like raw material security, climate change, environment, and health and safety. However, when you have a robust framework and environment framework, you can control the risk and bring it to an acceptable level. We have a focus on alternate fuel, which is leading to raw material security. We also have zero accidents happening and are focusing on skill development programs for the employees. This helps the community and prevents any outcry from their end.

One often ignored vertical in ESG in governance. What are the corporate governance challenges you face at Dalmia right now given the hybrid work situation and inflation?

I have worked with many organisations, and many of them were the best as far as corporate governance is concerned. At Dalmia we have some of the best practices, for example, we have an independent director chairing the port. Almost 50 percent of them are independent directors, which is over and above the requirements set by Ambience. Most of the board committees are also chaired by independent directors. We have code of conduct policies and practices also in place. Information security is one area we need to work upon, and I am working closely with the IT team over here, to bridge that gap and come out with a robust information security management system.

Indian economy is on a rebound now, with shops opening up and people heading back to work. What is your vision for Dlamiya henceforth as a leader and visionary?

Government spending on infrastructure is providing a stimulus to the cement industry. The Gatishakti project of the government, its commitment to 1.4 crores housing under the affordable housing scheme. INR 1.47 lakh crore will be spent on infrastructure, which will require a significant quantity of cement. This is certainly translating into the growth of the cement industry, where we are expecting a double-digit growth and we will be 130 million tonnes by 2030.

How do you see the government’s initiatives impacting Dalmia’s ESG plans?

By 2030 we will get rid of conventional energy, that is, energy from power plants. The government’s focus is going to help us meet this target. Our honorable Prime Minister Narendra Modi at Glasgow has not only made a carbon-neutral country by 2070, but he also committed to 520 GW of renewable energy by 2030. This will help in ease of new policies as far as renewable energy is concerned. Recently, the government has come out with a green hydrogen policy as well. All this is going to help Dalmia cement in achieving the target they have set.

How do you plan to tackle the challenges faced by the cement industry today?

The cement industry in India is laden with challenges. The first is definitely from the investors because they think the cement industry is an offender in climate change. It contributes seven to eight percent of the global carbon pool. The investors who are members of the United Nations Principal of Responsible Investment and the like are asking the cement industry to cut down on the Co2 emissions then only investment will happen. Cement is the second largest material consumed on the Earth after water, and to produce it a lot of natural resources are consumed. When you do that, there is a possibility you disturb the ecosystem. Due to this, community living may be impacted, which increases the pressure from the community. While you need to tackle these problems, you also need technology and policy-related enablers. Wherever the cement is used, there is a pricing pressure also. However, if you look at Dalmia Cement’s performance in the last few years, we have been able to successfully tackle these challenges.