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 India’s leading companies This research investigates the extent to which leading Indian banks and companies are thinking ‘green’ and acting ethically. Sixty two of the world’s 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 India’s 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 India’s 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 don’t 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 India’s 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@le.ac.uk