Carbon, competitiveness and credibility: Ganggaa C Sharma on aluminium’s next challenge
Mr Gangaa C Sharma, an international professional with over 30 plus years of experience in management advisory and assessments and Managing Director & CEO of CETIZION Verifica Pvt Ltd. He is also former Board member of the Global Sustainability Standards Board (GSSB) at the Global Reporting Initiative (GRI), was approached by AL Circle for his insights into the aluminium industry’s evolving sustainability priorities. He highlighted the growing influence of sustainability on business continuity, profitability and global competitiveness.
As supply-chain disruptions and carbon regulations poses new challenges to the industry, Mr Sharma explores significance of emissions data credibility and limitations of downstream producers for precursor emission performance. He also draws attention to a less visible part of aluminium’s circularity story: informal scrap collection, wherein supply chain traceability, transparency and responsible practices remain pressing concerns.
Looking towards 2030, Mr Sharma connects decarbonisation with responsible consumption practices as a path to a more resilient aluminium industry. Read the interview below to explore his perspective on turning today’s sustainability challenges into opportunities for responsible growth.
AL Circle: You have been closely involved with sustainability and ESG in the aluminium industry. What has changed most in the industry's approach to sustainability over the last few years?
Mr Gangaa C Sharma: If I look at over past years, sustainability has become more and more important, and it is driving businesses in terms of business continuity and sustained growth. If you look at the regional conflicts, logistics and material availability have been disrupted. So, in order to revive business and maintaining momentum, many sustainability principles are playing an important role, such as a business continuity plan, while at the same time maintaining responsible business practices and addressing human rights issues to preserve the integrity of the entire supply chain.
So, we see this as the biggest change, on the logistics side of the supply chain, and it will always have a further impact on profitability and delivery timelines. Many companies have invoked force majeure clauses because of this special situation. So, these are very recent developments impacting businesses heavily.
On the other hand, market regulators requiring businesses to adhere to low carbon product and services to drive low carbon economy such as EU-CBAM, UK-CBAM, India-CCTS etc. In the initial phase, it might pose difficulties to address and aligned but long term it will benefited all involved stakeholders. Mutual cooperation among regulators would be required to reduce burdens on business and there are some positive developments in pipeline such UK government accepted India Carbon Credit Trading Scheme (CCTS).
AL Circle: Recycling is becoming increasingly important for aluminium’s sustainability story. In your view, what needs to change to make the aluminium recycling value chain more transparent and responsible?
Mr Gangaa C Sharma: Most of the recycling at the collection level, especially from municipalities, comes from the informal sector, and there is absolutely no visibility into its practices or the way financial transactions happen before the material is brought into the formal sector. That gap between the two operating systems is the biggest challenge.
So the way forward required certain major actions. We need minimum documentation and guidelines for intermediate companies between informal collection and businesses to demonstrate traceability, transparency and ethical sourcing practices.
We required developing mechanism for incentivising recycling efforts. It will encourage all parties involved to handle the recycled material with greater care. So we believe that more active participation from organisations, including community-based organisations, documentation or guidelines, and some financial motivation that carries through to final product pricing all have to be combined to drive this.
AL Circle: Standards such as ASI are becoming important across the aluminium value chain. Do you see certification becoming a competitive advantage, or will it eventually become a basic requirement for doing business?
Mr Gangaa C Sharma: The ASI standard and its certification requirements encompass entire organisational affairs, right from boardroom governance issues to labour, health and safety, and community issues. So even if we set ASI aside for the moment, we need a system that helps you as an organisation to do business responsibly and profitably in a balanced manner. Henceforth, ASI standard is acting more of an enabler for the organisations to operate at par with international best practices.
The London Metal Exchange (LME) stringent responsible sourcing guidelines based on the OECD five-step framework, which in turn is ASI Performance Standard v3.1 criterion, 9.8 requirements. Adopting ASI Performance standards and 3rd party certification going to be business norms in near future.
It is imperative for the business to operative at at global scale and sustained growth, ASI certification is one of major business success factor.
AL Circle: With regulations such as CBAM and increasing customer expectations, how should aluminium producers in India prepare themselves to remain competitive in global markets?
Mr Gangaa C Sharma: The Indian aluminium value chain required to start immediately as CBAM regulations is already in force and required to work more closely with their precursor for verified GHG emissions as per CBAM methodology. Gradually, it should become part of purchasing agreements to demand and incentive better GHG emission performance to achieve business own commitments and obligations.
In case of EU-CBAM, starting year 2027, companies will be undergoing physical verification on site. It means, Indian aluminium producers required to develop, review or aligned their GHG management systems as consequences for not meeting the requirements is significant.
We required training our employees dealing with GHG emissions to better understand data integrity, accuracy and precision required as well as periodic regulations updates. By any reason if reported GHG numbers are misinterpreted or miscalculated in terms of reporting boundary, calculation methodology, emission factors, inclusions/exclusions etc. It will have adverse impact on organization reputation, business disruption and paying higher carbon tax.
AL Circle: In the context of CBAM, India’s primary aluminium producers have established emissions benchmarks and publicly available reports. How does the downstream sector compare? Are companies effectively capturing and reporting their GHG emissions data, or do significant gaps remain?
Mr Gangaa C Sharma: As a downstream producer, we are solely dependent on precursor or primary aluminium producer depending upon position in value chain. Major challenge experienced so far that inputs GHG emissions are not verified as per globally recognized verification standards like ISO 14064. It carries lot of un-certainty in reported numbers by downstream producer. The Producer need to clearly understand the source of input emissions (pre-cursor) e.g Life Cycle assessment, Corporate GHG accounting, CBAM methodology etc. They look similar but vary in approach, methodology and so in results.
Assuming, we are buying from smelter, we should not consider reported GHG emissions data unless it is credibly verified. The other option is to use “default value” which are conservative in nature and resulting into paying higher carbon tax. So this is the dilemma at the moment.
AL Circle: Looking ahead to 2030, what is the one sustainability priority you believe the aluminium industry should focus on most?
Mr Gangaa C Sharma: Decarbonisation using levers like use of Renewable Energy optimise use of recycled material and recycling, although, if you look at it, recycling is a lever, something that enables. We should also focus more on responsible consumption. It's not just about making production more efficient; we as consumers also have to develop a habit of sustainable consumption, for example by increasing the life of a product and through lightweighting.
AL Circle: What is the final message you would like to give to our global audience?
Mr Ganggaa C Sharma: Dear all, it's a Challenging time but every crisis has a silver lining, and we see a great opportunity waiting for us in this situation to re-aligned our business model. And we are sure that all of us together will come out of it successfully. Sustainability is becoming more and more integral to day-to-day business affairs, and it's going to benefit society, the environment and business overall.
