ESG Investments: Top banks fail to disclose finance shares directed to climate solutions, says SBI CAPS

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Also Read: Redefining real estate: The evolution from ESG compliance to corporate leadership ‘’While 22 banks out of the 26 assessed have set at least one sectoral target for their lending portfolio, only 6 banks have set financing conditions for high-emission sectors. This means that most of the banks’ sectoral decarbonization targets and commitments are not backed by a full set of measures to incentivise the transition of companies in that sector,'' said TPI in its study.

Most institutions are not reporting their credit risks (65 per cent), such as borrowers’ default on loan repayments and most (74 per cent) are not reporting market risks, such as stranded assets and financial asset price devaluation, showed the findings of the study, according to a CDP study from 2020 based on 300+ financial institutions. Despite the growing momentum of financial institutions announcing net zero targets, the CDP study shows less than half of disclosing financial institutions and only 27 per cent of insurers report actions to align portfolios with limiting global warming to well-below 2 degrees Celsius.

Earlier this month, the government launched a special program where an individual or entity can earn green credit and trade it on a dedicated exchange. The initiative is meant to incentivise environmentally positive actions, and is a part of the ‘LiFE’-‘Lifestyle for Environment’ movement.

The scheme envisages a market-based mechanism by which firms may meet their obligations in law through green credit trade. Green Credit refers to a unit of an incentive provided for a specified activity; delivering a positive impact on the environment.