“A formal definition of green finance in India would enable more accurate tracking of finance flows in green areas, which in turn would help in designing effective policy regulations and institutional mechanisms directed at increasing both public and private investment in green sectors ,” said Khara.
He suggested that India’s green finance definition could be formed through a combination of adopting international practices, developing a set of principles for green economic activities and obtaining stakeholder views.
Speaking at the ESG India Leadership Award, Khara said, “Unless banks are able to provide adequate credit to green projects and measure the risk in their portfolios, the bank’s depositors and shareholders will continue to be able to access ESG (Environmental, Social and Governance). ) will continue to take risks. Erode returns.”
To support acceleration and green financing, he said, a number of structural changes to the traditional lending approach would be required, including an assessment and certification of each project’s green credentials and an understanding of the corporate road map to achieving net zero.
Talking about SBI’s ESG initiative, he said that the bank aims to become carbon neutral by the year 2030 and several measures have been taken to reduce its carbon impact.
He said that it is not limited to setting up of solar power plants but plantation, organic farming and some other measures to ban the use of single-use plastics in the premises.
With regard to operations, he said the bank is also in the process of identifying climate risks, which have the potential to generate significant changes in the business.
“The Bank recognizes the growing climate change risk inherent in its credit portfolio and has initiated the process of creating a framework for climate risk management in this regard,” he added.
He said that policies have been put in place to enhance the bank’s exposure to climate change and the bank is providing loan facilities on easy terms to the borrowers in the renewable energy sector.
He also said that for loans above Rs 50 crore, borrowers are given scores based on their performance on various ESG parameters.
Over the years, he said, State Bank Of India Designed products and services to encourage and ease the transition to eco-friendly technologies.
Green bonds and green loan bonds worth USD 800 billion have been issued since 2018-19, while a green loan of EUR 50 million was raised in 2021.
The money was used to bring about a positive environmental impact for renewable energy in accordance with the bank’s green bond framework, he said.
Acuite Group’s ESG rating agency ESGRisk.ai announced 21 winners out of the top 500 listed companies across 55 industries.