Business in "Greentech" - Companies that embraced Sustainability, Future Potential in Market.

Not more than 2 months ago, Switzerland-based world's top cement maker Holcim made an exit from the Indian market as legendary business tycoon Gautam Adani's conglomerate clinched a deal to buy Holcim AG's cement businesses (ACC and Ambuja Cement) in India for $10.5 billion, becoming the country's number 2 cement manufacturer after the Aditya Birla Group owned UltraTech Cement, the company said in a statement.

Now the question here is, why did Holcim leave such a lucrative market as India and sell its stakes to Adani altogether?

To know the case fully, let us first study the background of this company called Holcim and analyse its approach to the cement business.

Firstly, its important to know about cement and its terrible impact on climate.

Cement, being key component of concrete, is an integral part of our everyday lives. In fact, it is the second-most-consumed product globally after potable water, and it is used in almost everything we build—from houses and cityscapes to dikes and dams. At the same time, it is also a major contributor to global CO2 emissions.

The cement industry alone is responsible for about a quarter of all industry CO2 emissions, and it also generates the most CO2 emissions per dollar of revenue. About two-thirds of those total emissions result from calcination, the chemical reaction that occurs when raw materials such as limestone are exposed to high temperatures.

Scientists and governments alike have called for increasingly stringent greenhouse gas (GHG) emissions targets as the consequences of climate change become more apparent.

Innovation will be critical to achieving the cement industry’s sustainability potential, with promising avenues already emerging.

Holcim's exit from India is part of the group's 'strategy 2025' that aims for sustainable solutions for the building materials sector.

The sale of the Indian operations, which included 31 cement plants, would lower Holcim's CO2 profile, Holcim Chief Executive Jan Jenisch said, Reuters reported.

Making cement is an energy intensive industrial process which produces high levels of carbon, a situation which has deterred many investors and weighed on Holcim's share price.

Its shares were indicated 2.9 per cent higher in premarket activity.

"Around 26% of our CO2 emissions are in India, so we will have a much reduced CO2 footprint," Jenisch said. "We will always make cement, but we will decarbonise cement. We are happy to build up other segments like building solutions and products," he said.

The divestment in its India businesses is the latest move by Holcim to reduce its reliance on carbon-intensive cement production, an industrial process which produces high levels of CO2 emissions and has therefore deterred many environmentally-conscious investors.

But again, the company that grabs all its profits from cement manufacturing cannot ignore its financial losses, quitting cement manufacture by giving up its stronghold on markets like India etc. How can a company, which is best in its sector, has no worldwide direct competitor, remake its entire business model just for environmental causes all of a sudden? Its just unreal to think.

Friends, there is something called carbon tax. A carbon tax directly sets a price on carbon by defining a tax rate on greenhouse gas emissions or – more commonly – on the carbon content of fossil fuels.

As the name suggests, The tax is a fee imposed on companies that burn carbon-based fuels, including coal, oil, gasoline, and natural gas. Its sort of a "pollution tax". This carbon tax stops wild carbon emissions by industries, encourages investors to opt for a cleaner alternative and promotes sustainable development. So the climate conscious revamp of Holcim's brand model has some economical reasons too.

All in all, I really appreciate this move by Holcim to quickly adapt itself corresponding to the present needs of the society. It changed its strategic approach towards the cement industry, being the first in its sector to look for innovative ways to make construction sector sustainable.

The introductory segment of Holcim's website reads, 

"Holcim builds progress for people and the planet. As a global leader in innovative and sustainable building solutions, Holcim is enabling greener cities, smarter infrastructure and improving living standards around the world. With sustainability at the core of its strategy Holcim is becoming a net zero company, with its people and communities at the heart of its success. The company is driving circular construction as a world leader in recycling to build more with less.

Holcim’s profitable growth will be driven by innovative building solutions, from ECOPact green concrete to energy-efficient roofing systems. We will lead cement’s green transformation, with solutions like ECOPlanet, including the world’s first cement with 20% construction & demolition waste inside.

Sustainability is at the core of our strategy, with our industry’s first 2050 net-zero targets, endorsed by the Science Based Targets initiative (SBTi). Holcim will remain at the forefront of green building solutions, with at least 25% of ready-mix net sales coming from ECOPact."

Already dominating the cement industry, Holcim goes one step further by actually building a world-class product which is a substitute to cement itself. One of the best examples of the same is "EcoPact concrete" whose production reduces carbon emissions from 30% to 100 as compared to conventional concrete.

Holcim is the best example of how big the green and clean industry is expected to become in the next decade.

Another great example of a company that redefined its entire business model around sustainablity is Total, which was once an oil giant in the energy market, now rebranded as TotalEnergies.

TotalEnergies is a global multi-energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity.

Its website reads, 

 "Our more than 100,000 employees are committed to energy that is ever more affordable, cleaner, more reliable and accessible to as many people as possible. Active in more than 130 countries, TotalEnergies puts sustainable development in all its dimensions at the heart of its projects and operations to contribute to the well-being of people."

One of the key focus of this company has been to innovate in the field of green hydrogen as a fuel substitute to petroleum.

Hydrogen is the most abundant chemical element in nature. During production and combustion, it does not produce greenhouse gases and is already 10% more sustainable than fossil fuels. In short, it is a technology which is a revolution in making in the renewables sector. All it needs is a bit of attention from innovators and funding from investors. More on this in some future blog. 

Now here's a funfact.

TotalEnergies has entered into an agreement with Adani Enterprises Limited (AEL) to acquire a 25% interest in Adani New Industries Limited (ANIL). ANIL will be the exclusive platform of AEL and TotalEnergies for the production and commercialization of green hydrogen in India. ANIL will target a production of one million metric tons of green hydrogen per year (Mtpa) by 2030, underpinned by around 30 gigawatts (GW) of new renewable power generation capacity, as its first milestone.

The investment in ANIL marks another major step in the strategic alliance between TotalEnergies and Adani Group – India’s leading energy and infrastructure platform – whose operations across India include LNG terminals, gas utility business, renewable power and biogas production, and now green hydrogen. It will amplify the key role that TotalEnergies and Adani intend to play in the energy transition, and in helping India decarbonize its mobility, industry, and agriculture, while also contributing to the country’s energy independence.

 TotalEnergies is convinced that renewable and low-carbon hydrogen will play a major role in the energy transition. The Company is working with its suppliers and partners to decarbonize all the hydrogen used in its European refineries by 2030. This represents a reduction in CO2 emissions of 3 million tons per year. Further out, TotalEnergies aims to pioneer the mass production of renewable and low carbon hydrogen to meet demand for hydrogen fuel as soon as the market takes off, notably to help decarbonize heavy transport. The renewable hydrogen production capacity currently under development in Europe and India will contribute to TotalEnergies' ambition to increase new molecules to 25% of its energy production and sales by 2050 – including biofuels, biogas, hydrogen, and e-fuels.

THIS. IS. THE. FUTURE. THAT. WE. ALL. AWAIT.

That was it, dear friends, some instances of companies which embraced sustainability!

Thanks,

Daksh Parekh.