India’s $10 Trillion Net-Zero Challenge Hindered by Weak Corporate Transition Planning

India faces a monumental challenge in mobilizing the estimated $10 trillion (₹883 lakh crore) in cumulative investments required to achieve net-zero emissions by 2070, with a new analysis revealing that fragmented and compliance-driven corporate transition planning threatens the country’s ability to attract this capital.

A comprehensive report by the Institute for Energy Economics and Financial Analysis (IEEFA) has exposed critical weaknesses in how India’s largest corporations approach climate transition planning, finding that ambitious environmental targets rarely translate into credible, financially integrated strategies that investors and lenders can evaluate and support.

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Systematic Assessment Reveals Strategic Gaps

IEEFA conducted a detailed examination of 33 companies spanning six high-emitting sectors—power, steel, cement, chemicals, commodities, and oil and gas—to assess the quality and completeness of their climate transition planning. The analysis revealed three fundamental weaknesses undermining the effectiveness of corporate climate strategies across India’s industrial landscape.

First, while most companies have announced net-zero or emissions-reduction targets, few provide substantive explanations of how they will achieve these goals. “Only a limited number link their goals to capital expenditure plans, revenue assumptions or changes in business strategy, making it difficult for investors and lenders to assess the feasibility of transition pathways,” said Shantanu Srivastava, IEEFA’s South Asia research lead for sustainable finance and climate risk.

This disconnect between targets and implementation represents a critical failure in corporate planning. Without clear linkages between climate ambitions and business fundamentals including capital allocation, operational changes, and financial performance, stakeholders cannot distinguish between genuine transition commitments and aspirational statements disconnected from corporate strategy.

Financial Disclosure Deficiencies

Financial disclosure emerges as another major gap in India’s corporate transition planning ecosystem. Companies seldom quantify climate-related risks and opportunities in ways that enable meaningful financial analysis. Scenario analysis, when conducted, remains largely qualitative with little transparency around the assumptions used or the potential financial impacts identified.

This qualitative approach to scenario analysis fails to meet the needs of sophisticated institutional investors and lenders who require quantified assessments of how different climate futures—varying regulatory pathways, technological developments, and physical climate impacts—might affect a company’s financial position, cash flows, and asset values over time.

The absence of quantified climate risk assessments leaves capital allocators unable to properly price climate exposure into their investment and lending decisions. Without understanding the magnitude of potential climate-related financial impacts, investors cannot adequately assess whether current valuations reflect underlying climate risks or whether companies have sufficient financial resilience to navigate transition challenges.

Governance and Accountability Weaknesses

Governance reporting presents a third critical weakness in India’s corporate transition planning landscape. “Whilst most companies report board- or management-level oversight of sustainability issues, few provide evidence of clear accountability, decision-making authority or incentive structures linked to transition outcomes,” said Tanya Rana, energy analyst at IEEFA South Asia and co-author of the report.

Effective climate transition requires embedding climate considerations into core governance structures, not treating them as peripheral sustainability initiatives. This means establishing clear lines of accountability from the board through executive management to operational leaders, defining who makes climate-related decisions and how those decisions integrate with broader corporate strategy.

Crucially, governance frameworks must include incentive structures that align management interests with transition success. Without tying executive compensation, performance evaluations, and career advancement to climate transition milestones, companies risk treating transition planning as a reporting exercise rather than a strategic imperative demanding managerial attention and resources.

Sectoral Heterogeneity and Best Practices

The IEEFA analysis identified wide variations in transition planning maturity across sectors and company types. A small cohort of large or globally exposed firms demonstrate relatively advanced practices, while the majority of companies remain at early stages of transition planning development.

This bifurcation reflects differing pressures and capabilities. Companies with international operations or those seeking to access global capital markets face stronger stakeholder demands for credible transition planning. Domestic lenders and shareholders in developing markets like India have historically placed less emphasis on climate considerations, reducing incentives for companies serving primarily domestic stakeholders to invest in sophisticated transition planning.

Larger firms also possess greater technical and financial resources to dedicate to transition planning, including specialized sustainability teams, access to external consultants, and capacity to implement complex scenario modeling and risk assessment frameworks. Smaller companies may lack these resources even when they recognize the strategic importance of transition planning.

Disclosure Patterns and Weaknesses

Across the corporate landscape, IEEFA found that disclosures tend to emphasize broad ambition statements while providing minimal detail on critical implementation elements. Specific weaknesses include inadequate information on capital spending plans allocated to transition activities, limited transparency around how transition will affect core business operations and revenue streams, and particularly poor coverage of Scope 3 emissions.

Scope 3 emissions—those generated in a company’s value chain including suppliers and product users—typically represent the majority of total emissions for many companies. Yet these prove most challenging to measure and manage, requiring coordination across organizational boundaries and potentially necessitating fundamental changes to business models or supply chain relationships.

The reluctance or inability of companies to address Scope 3 emissions comprehensively signals that transition planning remains focused on more easily controlled direct emissions rather than grappling with systemic value chain transformation that genuine decarbonization demands.

Regulatory Framework Constraints

The weaknesses in corporate transition planning reflect not only individual company shortcomings but also limitations in India’s regulatory framework. The Securities and Exchange Board of India’s Business Responsibility and Sustainability Reporting (BRSR) framework represents significant progress in mandating ESG disclosures but does not yet include explicit transition planning requirements.

BRSR covers various sustainability metrics but lacks detailed guidance on forward-looking financial metrics that connect climate strategy to business performance. The framework does not mandate comprehensive scenario analysis, clear breakdown of short-, medium- and long-term transition goals with corresponding metrics, or explicit linkages between climate targets and capital allocation plans.

This regulatory gap creates an environment where companies can satisfy compliance requirements through high-level disclosure of climate targets and general sustainability initiatives without developing or revealing the detailed operational and financial planning that credible transition demands.

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Capital Mobilization Imperative

The stakes for improving corporate transition planning prove extraordinarily high given India’s capital needs. Independent studies including research from the CEEW Centre for Energy Finance estimate India requires cumulative investments exceeding $10 trillion through 2070 to transform its power, industrial and transport sectors toward net-zero emissions.

This investment requirement vastly exceeds what domestic capital sources can provide, necessitating substantial international capital flows. Yet global institutional investors increasingly demand credible, detailed transition plans as prerequisites for deployment of climate-focused capital. Without improved corporate transition planning and disclosure, India risks losing access to the international sustainable finance markets essential for funding its transition.

The fragmented, compliance-driven approach to transition planning identified by IEEFA creates information asymmetries that deter rather than attract capital. Investors facing uncertainty about whether companies have viable transition strategies may choose to deploy capital in markets where corporate planning proves more transparent and credible.

IEEFA Recommendations for Corporates

To address identified weaknesses, IEEFA called on companies to fundamentally strengthen their approach to transition planning. Corporations should establish direct linkages between climate targets and capital investment programs, clearly identifying how much capital will be allocated to transition activities over specific timeframes and how this allocation aligns with emissions reduction trajectories.

Transition planning must integrate with core operational planning, showing how facilities, supply chains, production processes, and product portfolios will evolve to reduce emissions while maintaining or enhancing competitive position. Companies should also connect transition planning to financing needs, identifying gaps between internal cash generation and required capital deployment and articulating strategies for accessing additional financing through debt, equity, or partnerships.

Risk management frameworks must incorporate climate considerations systematically, treating climate risks with the same rigor applied to traditional financial, operational, and strategic risks. This requires moving beyond qualitative risk acknowledgment to quantified assessments integrated into enterprise risk management processes.

Finally, companies must strengthen data systems and analytical capabilities to support robust scenario analysis. This includes investing in emissions measurement and monitoring systems, developing capabilities to model business performance under different climate scenarios, and establishing processes to regularly update analysis as climate science, policy, and technology evolve.

Regulatory Reform Imperatives

Recognizing that voluntary corporate action alone will prove insufficient, IEEFA urged the Securities and Exchange Board of India to strengthen the BRSR framework by adding explicit transition planning requirements. This should include mandatory disclosure of detailed transition plans showing how companies will achieve announced climate targets, specification of short-, medium- and long-term milestones with associated metrics, and clear presentation of capital expenditure plans linked to transition activities.

Enhanced BRSR requirements should mandate more rigorous scenario analysis, requiring companies to quantify how their business might perform under different climate pathways including both physical climate risks and transition risks from policy, technology, and market changes. Guidance on forward-looking financial metrics would help standardize how companies present the financial implications of climate risks and opportunities.

IEEFA emphasized that successful reform requires clearer guidance from regulators on what constitutes adequate transition plan disclosure. Without explicit standards, companies and their advisors lack clear targets for disclosure quality and comprehensiveness, perpetuating the current environment of heterogeneous, often inadequate disclosures.

Cross-Regulatory Coordination

Beyond SEBI’s role in corporate disclosure, IEEFA highlighted the need for stronger coordination across multiple regulators whose mandates touch on climate transition. The Reserve Bank of India influences climate-related financial flows through its oversight of banking sector lending, capital adequacy requirements, and guidance on climate risk management for financial institutions.

The Bureau of Energy Efficiency plays a crucial role in establishing energy performance standards that shape industrial transition pathways and create regulatory drivers for corporate decarbonization. Coordination between these regulatory bodies would ensure that corporate transition planning responds to coherent policy signals rather than navigating potentially contradictory requirements from different regulators.

This coordination proves particularly important given India’s federal structure, where state-level policies also significantly influence corporate transition contexts. Coal-dependent states face particular challenges in managing economic transitions affecting revenues, employment, and industrial bases historically built around carbon-intensive sectors.

International Context and Best Practices

India’s transition planning challenges exist within a global context where climate disclosure requirements are rapidly evolving. Jurisdictions including the European Union, United Kingdom, and various other developed economies have moved to mandate detailed transition planning as part of corporate climate disclosure frameworks.

The UK’s Transition Plan Taskforce, for instance, has developed detailed guidance on transition plan disclosure that has been described as setting a “gold standard” for how companies should present their transition strategies. While India faces different development priorities and constraints than developed economies, examining international best practices can inform how BRSR and other Indian frameworks might evolve.

Key elements from advanced transition planning frameworks include requirement for board approval of transition plans signaling governance integration, detailed breakdown of transition pathways showing how companies will transform business models and operations, quantified financial analysis including capital requirements and anticipated impacts on revenues and profitability, and regular progress reporting showing actual performance against stated transition milestones.

Investor and Lender Perspectives

From the perspective of investors and lenders, weak corporate transition planning creates multiple problems. First, it hampers ability to assess which companies have credible strategies to navigate the transition versus those facing elevated risk of stranded assets, competitive disadvantage, or regulatory challenges.

Second, inadequate disclosure prevents effective portfolio construction and risk management. Investors seeking to align portfolios with climate goals or manage climate-related financial risks need granular, company-specific information that current Indian corporate disclosures often fail to provide.

Third, weak transition planning undermines ability to engage constructively with portfolio companies. Investors increasingly seek to use their ownership stakes to influence corporate climate strategy through dialogue and voting, but meaningful engagement requires companies to have developed transition strategies substantive enough to discuss and refine.

Lenders face particular challenges given that credit risk assessment inherently requires forward-looking analysis of borrowers’ ability to repay over loan tenors that may extend years or decades. Climate transition will reshape industries and competitive dynamics over precisely these timeframes, making understanding of corporate transition strategies essential for prudent lending.

Implementation Challenges and Capacity Building

While IEEFA’s recommendations point toward necessary improvements, implementing them will require addressing real capacity constraints facing Indian corporations. Many companies, particularly smaller firms or those in sectors with less climate-focused shareholder pressure, may lack internal expertise in transition planning, scenario analysis, and climate risk quantification.

Building this capacity requires investments in training, hiring specialized personnel, and potentially engaging external advisors. Industry associations and professional service providers have roles to play in developing training programs, guidance materials, and frameworks that make sophisticated transition planning more accessible to companies currently lacking these capabilities.

Regulatory clarity and standardization can actually reduce the burden on individual companies by establishing common frameworks, methodologies, and disclosure templates rather than requiring each company to develop bespoke approaches. International alignment—for instance between BRSR and frameworks like the International Sustainability Standards Board’s standards—can further reduce complexity for multinational corporations operating across jurisdictions.

Conclusion and Path Forward

IEEFA’s analysis reveals that India’s corporate sector faces a critical gap between climate ambition and credible, financially integrated transition planning. With $10 trillion in investment needed to achieve net-zero by 2070, closing this gap proves essential for capital mobilization.

The path forward requires concerted action from multiple stakeholders. Corporations must move beyond compliance-driven disclosure toward genuine strategic integration of transition planning with capital allocation, operations, and risk management. Regulators led by SEBI must strengthen frameworks like BRSR to explicitly require detailed transition plans with financial integration and forward-looking analysis.

Coordination across regulatory bodies including the Reserve Bank of India and Bureau of Energy Efficiency will ensure policy coherence supporting corporate transition. International cooperation can help India benefit from evolving global best practices while developing frameworks appropriate to its development context.

Ultimately, success in transition planning will determine whether India can access the massive capital flows required for its net-zero journey. Investors and lenders increasingly demand transparency and credibility in corporate climate strategies. Meeting these demands through improved planning and disclosure represents not just a compliance exercise but a strategic imperative for Indian industry’s ability to attract capital, manage risks, and compete in an increasingly carbon-constrained global economy.

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By: Montel Kamau

Serrari Financial Analyst

4th February, 2026