A senior executive told ET that the Indian Banks Association (IBA) is looking into the matter.
Prime Minister Narendra Modi said on monday COP26 Global climate summit to be completed by India net zero emissions by 2070.
“Already, international investors have started seeking information about the ESG policy of companies before investing in equity and liability products. About the ESG framework for Indian banking,” the executive said on condition of anonymity. The time to make a decision is favorable.” Companies are aligning their policies with the commitment to which their countries have agreed.
Another executive, who did not wish to be identified, said, “Right now we are looking at whether to share the best practices adopted around the world and leave it to individual banks to decide for them. Decide to adopt or formulate the most appropriate policy. Build a framework and give it to the member banks to build upon.”
Experts said banks need to plan according to the country’s climate goals, and that the management of climate risk for sustainable development is ensured by the ESG framework.
“The bank, being a traditional provider of debt capital, seeks to mitigate climate risk for sustained growth and recovery of capital,” said Dinesh Anand, National Managing Partner – Risk & ESG, Grant Thornton India.
Another senior banker said that already some lenders are following their individual policies at some stage and there should be an agreement on general metrics before attempting to implement them. “The impact on risk assessment needs to be understood and it may take some time to reach a consensus,” he said.
Last month, the chairman of the country’s largest bank State Bank of India (State Bank Of India), Dinesh Kumar Khara had said that the bank is also in the process of identifying climate risks that have the potential to generate a significant change in the business.