Building on its long-term commitment towards sustainable financing, Export-Import Bank of India (India Exim Bank), India’s premier export finance institution, announced its Environmental, Social and Governance (ESG) Framework.
In its endeavour to align with the global ESG considerations, and enhancing transparency and communication with its stakeholders, India Exim Bank set up its ESG framework to issue green, social or sustainable bond and loans. The Framework outlines India Exim Bank’s intent to enter into sustainable financing transactions to finance projects that have a positive environmental and/or social impact while supporting its business strategy. The Framework defines eligibility criteria in six green and four social areas, viz. renewable energy, sustainable water and wastewater management, pollution prevention and control, clean transportation, green buildings, energy efficiency, access to essential services and basic infrastructure, food security and sustainable food systems, MSME financing, and affordable housing.
This Framework has been reviewed by a Second Party Opinion (SPO) Provider – Sustainalytics. The SPO has confirmed that the Framework is ‘Credible and Impactful’ and is aligned with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021, and Social Bond Principles 2021, as administered by International Capital Market Association (ICMA), and Green Loan Principles 2021 and Social Loan Principles 2021, as administered by Loan Market Association (LMA), Asia Pacific Loan Market Association (APLMA), and Loan Syndications and Trading Association (LSTA). The SPO also states that the Bank is well-positioned to address common environmental and social risks associated with projects.
India Exim Bank has been ahead of market peers, in its commitment towards sustainable financing. In March 2015, the Bank launched India’s first USD-denominated 5-year RegS Green Bond. This was also the first benchmark-sized Green bond out of Asia in that year, which matured in April 2020. In 2019, the Bank issued its first ever USD-denominated Socially Responsible Bond.
Ms. Harsha Bangari, Managing Director, India Exim Bank, said “In the evolving landscape, ESG issues have dominated the international policy agenda. Finance plays a critical role in channelising such ESG goals. In this backdrop, we are happy to announce our ESG Framework, along with the Second Party Opinion. Such an umbrella framework for ESG bonds and loans will enable the Bank to enhance its commitment towards sustainable financing in accordance with global best practices.”
As per the Framework, each sustainable financing transaction will adopt procedures for managing the use of proceeds, project evaluation and selection, management of proceeds and reporting. The use of proceeds of such bonds are required to be used exclusively to finance or re-finance, in whole or in part, new or existing eligible Green and/or social projects aligned to ICMA Principles. The Bank has also set up a Sustainable Financing Committee (SFC), including representations from the Bank’s operating, compliance, and legal groups, to evaluate projects that may be eligible under this Framework.
“The ESG Framework is a result of the Bank’s conscious and continuous efforts to evolve in the ESG space. India Exim Bank is committed to broaden its role in the expanding green, social and sustainable bond markets. Going forward the Bank’s annual reporting will also be subject to external verification”, added Shri Tarun Sharma, Chief Financial Officer, India Exim Bank.
The ESG Framework and the SPO may be accessed on the Bank’s website (https://www.eximbankindia.in/esg-framework-details.aspx). The Bank also has in place a Board-approved ESG Policy for Sustainable Development / Responsible Financing. Further, the Bank has also been streamlining its internal operations for ESG-related parameters by taking up energy audits and associated measures for optimising energy consumption.