ENIRONMENTAL & SOCIAL MANAGEMENT SYSTEM (ESMS) POLICY
The socio-environmental dimension of business has become a structural and strategic element of successful companies due to the increasing awareness being created on this concept across the world. More focus on green products and support to green innovations and technologies are critical for the sustenance of the corporate and earth in the long run. An Environmental and Social Management System (ESMS) helps an organisation to integrate plans and standards into its core operations in order to anticipate environmental and social risks posed by its business activities and to avoid, minimize, and compensate for such impact. Lenders being channels of credit flow play a crucial role in promoting environmentally and socially sustainable projects. Bank, as an environmentally aware and socially responsible institution, has had always strived to ensure that negative environmental and social impacts arising from the lending activity is nil/nominal. This policy reiterates the commitment of the Bank for the environmental and social causes while lending through Bank’s outlets, including IFSC Banking Unit (IBU).
Definitions & interpretations
a) “ESMS / SEMS” means Environmental & Social Management System b) “ESMS Policy” means Environmental & Social Management System Policy of Bank. c) "Coal Related Sub-Project" means (a) the development or expansion of coal-fired power plants, coal mines, transportation assets used exclusively for coal, or infrastructure assets exclusively dedicated to support coal mines and coal transportation, or (b) any Person that, in the prior financial year, (i) generated more than 20 percent of its energy generation from coal-fired power plants, (ii) had an annual coal production of 10 million tons or more (iii) had installed coal-fired capacity of 5,000MW or more; d) “Green Loans” means loans to any borrower that meets the criteria detailed below. Green financing shall cover financial arrangements by way of credit facilities (fundbased and non-fund based) investments and derivative products that are targeted at projects / products which are environmentally sustainable and consider the aspects of climate changes. The eligibility criteria to classify as Green Loans are Eligibility Criteria Energy Efficiency Measures implemented aimed to acquire, replace, redesign or refurbish equipment, systems and / or contracting services/products to decrease in at least 15% the energy consumption for every unit of service output of the corporate entity. This includes utilizing waste energy and any other measure to improve the efficiency of energy use (or reducing specific energy consumption) of the system directly affected by the sub-loan based on minimum requirements. Coal related projects are not eligible. Page 2 of 7 Renewable Energy Installation or construction measure implemented by the borrower and aimed at investing into fixed assets that enable generation or productive use of electricity, heat, cooling and any other form of energy from renewable resources, including but not limited to solar, wind, hydro, biomass, geothermal and tidal. Green Buildings A loan to a borrower will be accepted as a Green Buildings loan subject to receiving an eligible Green Building certification and proof of an improvement in Energy Efficiency of at least 20%. Special Climate This include projects related to climate smart agri, water management, waste management, recycling plants and other categories which aim at reducing emissions, reducing the consumption of water, conservation of energy or are related to any other activity which has a direct positive benefit related to the climate and environment e) "E&S Officer" means a senior officer of Bank to be responsible for administration and oversight of the E&S Management System. f) “E&S Consultant” is the external agencies to be engaged by Bank to undertake E&S categorization and to undertake E&S Due diligence of high-risk business activities to be financed by Bank. g) “E&S Performance Standards” shall mean national / international benchmark for identifying and managing environmental and social risks. The Environmental and Social performance standards defined by IFC being one of the best benchmarks adopted worldwide, Bank has adopted the IFC performance standards for managing environmental and social risks as E&S Performance Standards, along with the National benchmarks.