Sustainable banking: The Strategies Followed by Indian Public Sector Banks

This study investigated the uptake and adoption of sustainable banking practices in Indian Public Sector Banks (PSBs), with a specific emphasis on Environmental, Social and Governance (ESG) integration, using a qualitative-dominant mixed-method approach based only on secondary data. The study examined how banks are integrating sustainability into governance, banking products, risk assessment, and inclusive lending based on an examination of ESG disclosures, regulatory filings and sustainability reports for SBI, BoB, PNB, and Canara Bank. The findings indicate that larger PSBs such as SBI and BoB are industry leaders in sustainability, with disciplines in ESG governance, issuing green bonds, integrating climate risk, and complying and aligning with global standards like the TCFD and the UN SDGs. Mid-sized PSBs, on the other hand, were simply reacting to regulatory requirements to establish a strategy for sustainability at the expense of having capacity and coherent implementation. The study also showed that the PSBs show regional and demographic bias in their willingness to finance green initiatives, and more importantly, less focused outreach to rural and vulnerable populations. In summary, the study finds that although there are policy frameworks in place, enforcement is weak, and there are internal capacity gaps that remain problematic. For PSBs to fulfill their intended role as an agent of change in India’s sustainability agenda, sustainability will need to be integrated into every aspect of all banking functions, supported by regulatory guidance, technology and capacity building.