Publication / 09 Nov 2015

Natural Capital Risk Exposure of the Financial Sector in India

The German Development Cooperation (GIZ), through the Emerging Markets Dialogue Program on Green Finance, commissioned Trucost to quantify the natural capital costs of 50 economic sectors in India.

Indian banks are financing business sectors with a total natural capital cost of INR 90,496 billion, equivalent to 2.9 times the credit provided to those sectors. If these natural capital costs were internalized by borrowers, it would impact their ability to repay loans significantly.

Indian banks are more exposed to natural capital risks than equity investors due to loans made to natural capital intensive sectors such as agriculture and power generation, as well as industries including food processing and iron and steel manufacturing. Government policy mandating loans to agriculture increases this exposure. Equity investors are less exposed due to the absence of agricultural companies in the Bombay Stock Exchange (BSE).

Industrial sectors together account for 28% of all natural capital costs financed, while representing 43% of credit disbursed. The majority of unpriced natural capital costs within industry occur within the food processing industry, which accounts for 12% of natural capital costs financed by banks due to the high water consumption of its agricultural supply chain. The power sector, represents 5% of the natural capital costs financed by banks due to greenhouse gas emissions associated with coal-fired power generation.


18 June, 2020
Events Building Best in Class ESG Practices’ – Webinar

In this Webinar we will take a look at how global banks and asset managers can build best practices around data quality, assessment frameworks and risk modelling. Christopher Perceval – Director and Head of Business Development EMEA at Trucost, part of S&P Global will be speaking at this event. For more info or details...

Find out more
16 June, 2020
Events ESG Disclosure and Due Diligence:  Through the Lens of Equity Capital Markets – Webinar

AFME’s first sustainable finance webinar will explore the increasingly important topics of ESG Disclosure and Due Diligence and more specifically, what they mean for Equity Capital Markets. With the support of our co-hosts, Allen and Overy, we’ll be using their planned report as a foundation to discuss further implications, challenges and projections around these...

Find out more
28 January, 2020
Events Uncovering Business Value from Environmental, Social and Governance Factors, Webinar, 28th January 2020

More than ever companies are measuring and disclosing their performance around environmental, social and governance (ESG) issues. By doing this, companies are able to reduce financial risks and uncover business opportunities. Moreover, record amounts of capital are flowing towards companies who do good. In this webinar you will learn: • The current sustainability landscape...

Find out more