Banks take consultants on board in green journey

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Bank of Baroda (BoB) are the government-owned lenders leading the way. SBI said in August that it wants to hire a consultant to measure carbon footprints in its loan portfolio, and benchmark the bank’s loan mix based on high- and low-emitting sectors, while taking into account the portfolios of other local and global peers. SBI also raised a $1 billion syndicated social loan in February, arranged by MUFG Bank and Taipei Fubon Commercial Bank, which it said was the largest ESG (environment, social, governance) loan by a commercial bank in Asia Pacific and the second-largest social loan globally.

BoB is looking to appoint a consultancy for advisory on green financing, showed a public document from 30 November. The document showed that the bank is embarking on an ambitious journey to enhance its green financing portfolio, and align its business and operations with ESG principles. Another public sector bank, Union Bank of India, said in July that it has empanelled EY, Deloitte, PwC, KPMG and Crisil as consultants to aid its ESG transition.

To be sure, large private sector banks like ICICI Bank have also shown similar commitment towards sustainability. For instance, ICICI Bank’s green financing portfolio stood at ₹11,900 crore as on 31 March, it said in its FY23 ESG report. Some of these initiatives have been spurred by regulatory nudges.

In April, the Reserve Bank of India (RBI) introduced a framework for accepting green deposits. These are interest-bearing deposits where proceeds would be earmarked towards certain environment-friendly sectors. The guidelines are meant to protect depositor interest while allowing better flow of funds towards green projects.