These are in line with the commitments sustainable development goals (SDGs), support India’s commitments under Paris Agreement.
“As part of its commitments, the Bank has set a target of providing incremental lending of Rs 30,000 crore over the next 5 years under Wholesale Banking for relevant sectors included in its Sustainable Financing Framework (SFF),” Rajesh DahiyaAxis Bank Executive Director (Corporate Centre) told PTI.
Environmental, social and governance (ESG) is a measure that investors use as a tool to assess how well a company’s practices are doing. Dahiya said that for the last 3-4 years, the word sustainability and ESG have sensitized people about the whole idea of a sustainable planet.
“These are metrics that have been talked about for almost 3-4 years now. However, with COVID and all its problems, it highlighted the issue of sustainability in a much larger and magnified way.
“In the next five years, we want to lend Rs 30,000 crore more in the form of wholesale banking to relevant sectors including Axis Bank’s SFF. We want to increase our portfolio of green loans,” said Dahiya.
He said the bank’s current wholesale banking portfolio for SFFs, which includes green and social sectors, is a little over Rs 29,000 crore and it intends to lend to companies that have green practices.
He said that after five years till 2025-26, the bank will assess these borrowings to see the positive social and environmental consequences and enhance it further.
Going forward, the lender will also reduce its exposure to carbon-intensive sectors in its wholesale banking business portfolio.
The lender said it is expanding its ESG risk coverage in credit appraisal under its ESG policy for lending.
Axis Bank is building and deploying an ESG Risk Assessment Toolkit with ESG Stress Testing and ESG Scenario Analysis for its large corporate, SME and agri-business verticals by 2022-23.
The lender will encourage borrowers to adopt good practices by offering 0.5 per cent interest subvention on new electric vehicle loans effective immediately.
“We will make 5 per cent of our retail two-wheeler loan portfolio electric by 2023-24,” he said.
In addition, the bank has set a target of incremental disbursement of Rs 10,000 crore by 2023-24 and increasing the share of women borrowers under ASHA Home Loans for Affordable Housing.
Also, the Bank will aim to reach 30 per cent female representation in its workforce by 2026-27 in line with its #ComeAsYouAre Diversity Charter.
Among other things, it will plant 2 million (20 lakh) trees across India by 2026-27 to contribute to the creation of a carbon sink.
Dahiya said Axis Bank is probably the first among the corporates to have constituted an ESG Steering Committee consisting of heads of key departments who will act as ESG champions within and outside the bank.
“Ever since COVID hit, our board got us together and decided… we want to create a practice that is different and that is measurable,” he said.
The Bank has announced its commitments ahead of the upcoming 2021 United Nations Climate Change Conference (COP26) in Glasgow, UK from 31 October to 12 November.
Participants are expected to talk about enhancing their commitments made at COP21 in Paris in 2015.
In line with its ESG strategy, Axis Bank recently raised India’s first permanent USD AT1 bond worth USD 600 million in overseas markets.