World
India
Indian banks remain largely unprepared to manage climate-related risks, according to a new report by Climate Risk Horizons (CRH). The report, titled “Unprepared”, assessed 35 scheduled commercial banks in India. These banks, listed by market capitalisation on the Bombay Stock Exchange (BSE), have a combined market value of Rs 4,582,292 crore as of March 2024. The group includes 11 public sector banks, 18 private sector banks, and six small finance banks. CRH found that only a few banks have made real progress in emissions disclosure, climate risk management, and coal divestment, despite rising financial threats linked to climate change.
Few Banks Disclose Full Emissions
Only seven out of the 35 banks assessed disclose all Scope 1, 2, and 3 emissions. CRH said this leaves major gaps in transparency and accountability. The report stated, “Only a handful have made meaningful progress in areas like emissions disclosure, climate risk management and coal divestment.”
Banks Miss Climate Strategy Targets
The report noted that most banks have not developed full climate strategies. It said, “This report highlights that the Indian banking sector faces significant challenges in aligning with global climate goals.” The report added, “Despite some progress in adopting frameworks like Partnership for Carbon Accounting Financials (PCAF) and Sustainable Development Goals (SDGs), the majority of Indian banks lack comprehensive climate strategies, adequate green finance portfolios, and integration of climate risks in their credit and lending decisions.”
Climate scenario analysis and risk management have started gaining traction. The report said there is a strong need for training and clear guidelines. It added, “There is an urgent need for capacity building and clearer regulatory guidelines to support a smooth transition towards sustainable banking practices.”
Calls for Action from RBI and Government
The report urged the Reserve Bank of India (RBI), government, and industry leaders to step in. It stated, “This report emphasises that the Reserve Bank of India (RBI), government, and industry stakeholders must take decisive action to accelerate the shift towards green finance.”
Net Zero Goals Lack Specifics
Five banks have set net zero targets. However, none have outlined clear reduction pathways. The report stated, “This makes it difficult to assess progress and credibility.” Third-party verification for emissions reporting has increased, but many banks still need to improve.
(With Inputs From ANI)
