Background and purpose

1
Is India banking for a greener future?
Background and purpose
Aims of the research

• to assess the role that leading Indian banks can
  play in safeguarding the environment and society
  through responsible lending practices
• to explore the role of smaller banks and
  financial service companies involved in project
  finance in India to assess general attitudes
  towards sustainable finance
• to evaluate the future of Corporate Social
  Responsibility (CSR) amongst Indias leading
  companies

This research investigates the extent to which
leading Indian banks and companies are thinking
green and acting ethically. Sixty two of the
worlds leading financial institutions have
voluntarily adopted a set of guidelines known as
the Equator Principles (EP), committing to
environmental and socially sustainable lending
decisions (Amalric 2005, Hadfield-Hill, 2007).
Currently there are no Indian signatories. This
research seeks to find the reasons why and to
ascertain their future commitment towards
sustainable lending.
Stage 1 Greening of Financial Institutions in
India Interviews were conducted with the CEOs and
senior management of Indias leading financial
institutions (Dun and Bradstreet, 2008). These
institutions were vaguely conscious of the EP
guidelines, however, the public sector is waiting
to be led by the Reserve Bank of India (RBI) and
the private sector banks seem to only want to
commit if there is regulation or financial
incentive. A case-study approach of Indias top
three banks will determine specific commitments
to responsible lending.
Stage 2 Sustainable Finance Semi-structured
interviews with CEOs and senior management were
conducted to assess general attitudes towards
sustainable lending. There is lack of awareness
of international environmental and social
guidelines amongst the smaller Indian financial
institutions. Currently, an Environmental
Clearance Certificate from the Ministry of
Environment and Forests is needed prior to
releasing the funds for a development project.
In the majority of interviews however, corruption
and bribery were mentioned. The Equator
Principles for the majority of the Indian banks
would just be another box to tick. However, if
Indian banks are to penetrate western markets and
participate more in the global economy, it is
important that they recognise their
responsibilities as global corporate citizens.
Stage 3 Corporate Social Responsibility
(CSR) In-depth interviews were conducted with
several companies who are leading the CSR agenda
in India. Several of the banks are working hard
to support the communities within which they
operate. Whilst in India, three NGOs supported
by several of the Indian banks were visited.
Without the banks financial and volunteer
employee support, these NGOs would be
non-operational. A number of the private sector
Indian banks believe in the triple bottom line
approach to business, a model which the rest of
the Indian financial sector should seriously
consider.

The Equator Principles are relevant to India
because we are funding big projects. If we dont
care for the environment now it will be too late


if it is regulated then it will become a box
ticking exercise. We should be responsible and
not told what to do

References Amalric F 2005 The Equator
Principles A Step towards sustainability?
Centre for Corporate Social Responsibility and
Sustainability CCRS Working Paper No 01/05.
Dunn and Bradstreet 2008 Indias top banks 2008
www.dnb.co.inAccessed 21/05/08. Hadfield-Hill S
2007 The Greening of Project Finance Geography
Compass 1 (5) 1058-75.
Summary Fieldwork, conducted in India, has
raised awareness of environmental and social
issues amongst the Indian banking sector. Indian
banks have significant influence over the
safeguarding of fragile social groups and
environments, therefore they must seriously
consider their attitudes towards responsible
lending both nationally and globally.
Sophie Hadfield-Hill, Department of Geography,
University of Leicester. sahh1_at_le.ac.uk