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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Green Initiatives

Deccan Pharma Ltd signs a long-term agreement to buy solar power from an off-site developer for its plant and receives renewable energy certificates for it. The board wants to report this in its BRSR-style disclosure on energy. Which treatment is most appropriate?

The company should report the power as renewable energy consumed and disclose that it is sourced off-site under a purchase agreement. This is a change in energy source, not an efficiency saving, so it belongs in the renewable mix and should not be ignored or shown as non-renewable.

  1. AReport the energy as renewable consumption and disclose that it is sourced off-site through a purchase agreementCorrect
  2. BIgnore it since the plant is not owned by the company
  3. CReport it as energy saved through efficiency
  4. DReport it as non-renewable since it comes through the grid

Explanation

Renewable energy bought under a procurement arrangement can be reported as renewable consumption, with the sourcing route disclosed for transparency. It is not an efficiency saving, because consumption is not reduced; it is a change of source. Ignoring it or treating it as non-renewable misstates the energy mix.

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