Integrating CSR and Sustainability in the Indian Banking Sector

Sustainability, CSR and banks are often not thought of in the same context. This is especially true in developing countries and something that is slowly changing. Recently, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and Small Industries Development Bank of India (SIDBI) jointly invited banks and financial institutions to the National Conference on Non-Financial Reporting and Risk Management held in Mumbai. GIZ brings together the long-standing expertise of the Deutsche Entwicklungsdienst (DED) gGmbH (German development service), the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH (German technical cooperation) and InWEnt – Capacity Building International. As a federally owned enterprise, GIZ works in the field of international cooperation for sustainable development. GIZ is commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ) and other German ministries. Germany has been cooperating with India by providing expertise through the organisations now forming GIZ for more than 50 years.  SIDBI is an independent financial institution aimed to aid the growth and development of micro, small and medium-scale enterprises (MSME) in India.  SIDBI has been named the top 30 Development Banks of the World in the latest ranking of The Banker, London. Around 70 participants from 22 banks came to the event which had been organized in partnership with Global Reporting Initiative Focal Point India and the Indian Institute of Management Bangalore (IIMB) as well as NextGen, The Energy and Environment Company. Participants discussed potential strategies for Indian banks and financial institutions to report on their sustainability performance. Dr. KC Chakrabarty, Deputy Governor, Reserve Bank of India (RBI) was the  guest of honour and delivered the key note address. He stressed the need for banks to integrate sustainability into their core business operations: “Charity is not sustainability, this is what we have to understand. Inclusive growth is not possible without sustainability”.  Mr. Rakesh Rewari, DMD of SIDBI highlighted how SIDBI has been integrating sustainability and responsibility in their core operations. Among other things, Mr. Rewari stressed how SIDBI has taken various steps to increase access to “green finance” and energy efficiency finance for medium and small scale enterprises. “SIDBI’s goal is to promote sustainability, both by practicing responsible business behavior itself and requiring the same from its MSME clients.” In a circular in December 2007, RBI had asked all commercial banks to integrate aspects of CSR into their operations. However so far, no mandatory guidelines have been put in place. In the national conference, the status quo of the integration of environmental and social concerns has been discussed and recommendations for banks, regulators and government were formulated by participating banks. Tools such as the Reporting Guidelines of the GRI were discussed and experiences of implementation by banks were exchanged. SIDBI as the first bank to report on the basis of the GRI Reporting Guidelines presented their lessons learnt from the reporting process. The event not only aimed to kicked off non-financial reporting. Stefan Helming, Country Director of GIZ India stressed: "Banks and financial institutions are important multipliers for promoting responsible business behaviour. Integrating sustainability in Indian banks is an important driver. Banks can create a market demand for businesses to integrate environmental, social and corporate governance aspects." This sentiment was backed up by Dr. Aditi Haldar, Director of the Global Reporting Initiative’s Focal Point India who said: “Financial Institutions play a vital role in driving a sustainable economy. With this conference, we want to respond to the lack of awareness and sensitivity around non-financial disclosure in the financial sector. There is a strong business case for sustainability reporting, and we have the chance to help develop a plan for Indian financial institutions to improve their transparency around sustainability issues.”