Rana Kapoor, the CEO and MD of Yes Bank, writes in the Financial Express about the opportunity for financial intermediaries in India in the sustainability field.
The sustainable finance niche in India represents a hitherto untapped yet potentially tremendously rewarding opportunity, and the time is right for socially responsible and sustainable investing (SRSI).
The concept of ‘sustainable finance’ and the recognition of availability and use of municipal financial resources determine the future of every community. It links four basic elements—vision, environment, plan and public—for a comprehensive planning approach.
Unlike its developed counterparts in the West, India has the opportunity to grow in a way that mitigates the costs of environmental and social degradation. This, in turn, presents a vast range of opportunities for India’s financial sector, given its unique role as an economic intermediary and vast ambit of influence over diverse stakeholders.
There are numerous global voluntary initiatives focused primarily on the financial sector, such as the UNEP-FI and the Equator principles, that banks can use as tools to translate their respective visions of sustainability into action plans. In addition to mitigating risks and enhancing a bank’s risk management capabilities, the incorporation of these principles opens up new markets and avenues for product differentiation. Those financing infrastructure projects, for example, can focus on green businesses or support initiatives in microfinance to help alleviate poverty.
I believe that India’s growth story provides tremendous opportunities for its financial intermediaries—from funding sustainable projects in the areas of efficient resource management to offering innovative products and services in the areas of carbon emission trading and microfinance, among others—to use sustainability as a strategic tool to enhance its own as well as the country’s competitive advantage.