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ENVIRONMENT AND SUSTAINABILITY

The Bank is committed to adapting to emerging trends that will shape the nation's transition to a low-carbon economy, with appropriate assessment of risks and opportunities in delivering on the objectives.

The Bank's efforts in promoting environmental sustainability is in three strategic areas including sustainable financing, in its own operations and corporate social responsibility.

SUSTAINABLE FINANCING

During fiscal 2023, the Bank made further efforts to embed sustainable financing in its business strategy. Consideration of Environmental, Social and Governance (ESG) aspect in the Bank’s lending decisions and risk management framework are important factors and various approaches have been implemented. The Social and Environmental Management Framework (SEMF) requires analysis of specific environmental and social risks as part of the overall credit appraisal process for assessing new project financing proposals. Key elements of the assessment include screening through an exclusion list drawn broadly from guidance by the International Finance Corporation (IFC) and the list of highly polluting sectors published by the Ministry of Environment, Forests & Climate Change (MOEFCC) in India, seeking a declaration from borrowers and independent due diligence as per the criteria defined in the SEMF.

As part of the credit evaluation process for all large corporate lending proposals, borrower ESG scores from external agencies, if available, are considered. Further, the Bank has developed sector-specific checklists to facilitate assessment of ESG and climate-related physical and transition risks that a borrower in sectors like power, transportation, cement, steel and others could be exposed to. This helps the Bank in profiling borrowers as ‘High’, ‘Medium’ and ‘Low’, based on their ESG-related risks and maturity in terms of policies and processes deployed to address these risks.

During fiscal 2023, the Bank developed a framework for Sustainable Financing, aimed at providing guidance on green/ social (sustainable) / sustainability-linked lending. It outlines the methodology and associated procedures to be uniformly applied to classify financial products and services offered by the Bank as sustainable finance. The framework specifies the eligibility criteria, the applicable due diligence requirements and the verification process for sustainable finance. The framework also aims to establish a consistent and comprehensive methodology for the classification and reporting of the Bank’s credit facilities as sustainable.

At March 31, 2023, the Bank's outstanding portfolio to sectors like renewable energy, electric vehicles, green certified real estate, waste management, water and sanitation, positive impact sectors like small-scale khadi, handicrafts and lending to weaker section under priority sector norms was about ₹ 556.00 billion. Of this, the green financing portfolio accounted for about 21.4%.

ADDRESSING CLIMATE-RELATED RISKS AND OPPORTUNITIES

Climate change and its impact on the economy and financial systems is a tangible risk and requires close monitoring. The Bank’s approach to analysing climate risks include developing methods to integrate climate risk in the risk management framework and begin testing the resilience of the lending portfolio to climate risks which can be categorised into transition and physical risks.

The Bank has formulated an approach to address risks emanating from climate change, as part of its Climate Risk Management Framework. The scope of the framework comprises assessment of impact of climate change on the Bank’s own operations, climate risk management of the Bank’s loan book and integration of material climate risks into the existing risk management framework. The framework will be periodically reviewed for aligning with regulatory guidance on climate risks. As climate risk management is at a nascent stage in the Indian banking industry and regulations in this regard are being formulated, the Bank will ensure that gradually the approaches evolve and get refined for integration of climate risk management within the risk management framework.

Further, the rapidly evolving regulations, policies, technology and law on climate change and climate action could significantly impact lending practices as well as enhance associated risks for the Bank. Navigating through this dynamic environment is crucial for the Bank's sustainable growth. The Bank will proactively integrate these risks into the Bank's credit evaluation process. Further, risks could arise with changing investor and customer expectations. The Bank is cognisant of transition from fossil fuel-based energy to renewable sources, and will capitalise on business opportunities in this transition based on selection of counterparty and appropriate risk-return in accordance with the Enterprise Risk Management framework.

The Bank has emphasised the need to sharpening the focus on measuring its carbon footprint. During fiscal 2023, evaluating Scope 3 emissions in own operations was taken up and the Bank is considering various pilot projects to assess key data and information requirements for calculating carbon and GHG (Greenhouse Gas) emissions in accordance with established protocols.

Key Focus Areas for Addressing Climate Risks

Own Operations

The Bank is working towards reducing its Scope 1 and Scope 2 emissions. A roadmap to reduce Scope 2 emissions and the overall emission intensity is being pursued. The Bank is in the process of evaluating Scope 3 emissions from own operations. The Bank is working towards identifying and putting in place the elements required to achieve carbon neutrality in own operations.

Sustainable Financing

The Bank has developed a framework for Sustainable Financing, which provides guidance on eligibility criteria for sustainable/sustainability-linked lending, guidance on assessment of facilities, monitoring and reporting of such facilities. This is the first step towards bringing sharper focus in the Bank's sustainable lending practices.

The Bank is also committed to extending its expertise to customers that are transitioning to decarbonise their business activities.

Risk Management

The Bank has formulated an approach to address risks emanating from climate change, as part of a Climate Risk Management Framework which comprises assessment of impact of climate change on the Bank’s own operations, climate risk management of the Bank’s loan book and integration of material climate risks into the existing risk management framework.

The Bank has been participating in pilots conducted by the regulator to evaluate impact of climate-related financial risks on the Indian banking sector.

To facilitate the above initiatives in the Bank, developing proficiency in understanding ESG-related risks and opportunities, and evaluation of ESG/climate-related risks has been embedded into the training imparted to a core team within the risk management group and other critical functions.

ENVIRONMENTAL SENSITIVITY IN OWN OPERATIONS

The Bank's ESG Policy emphasises its commitment to conduct business sustainably and efficiently, thereby reducing the environmental impact from own premises and operations. The key areas of focus are digitisation, minimising GHG emissions, energy conservation, water conservation, waste management and sustainable procurement.

During fiscal 2023, efforts were further expanded to identify and address critical areas to decarbonise own operations. Some key efforts included:

The Bank has shifted to use of electric vehicles for transport of Bank's staff at specific locations where call-centres are present. On an average,about 66,000 kms is covered every month which provides an abatement of approximately 15 tCO₂e* on a monthly basis.
The Bank has commissioned a 500 litres per day capacity machine for converting atmospheric moisture into clean potable water at one of the data centres. The water-from-air system is approved by the Environmental Protection Training and Research Institute as an environment-friendly technology. The machine produces approximately 350 litres of water per day and has significantly eliminated reliance on packaged drinking water.
The Bank has set up charging stations for electric vehicles at the ICICI Service Centre (Corporate Office) and the learning centre at Khandala. Both these are in Maharashtra.
To strengthen engagement of the Bank’s Infrastructure Management and Services Group (IMSG) with vendors on ESG and sustainability, the Bank has developed a Suppliers' Code of Conduct. The Code encourages vendors to adopt sustainable practices like efficient use of energy and water, waste management, and embed good practices like occupational health and safety, human rights and others in their operations.
The Bank has developed Green Procurement standards to promote purchase of environment-friendly goods.
The Bank has shifted to using FSC (Forest Stewardship Council) certified recycled paper for pre-print forms at its branches. This provides about 37% reduction in carbon emissions compared to conventional paper.
The Bank increased the proportion of renewable energy in total electricity consumption from 7.0% in fiscal 2022 to 9.0% in fiscal 2023.

*tCO₂e - Tonnes of carbon dioxide equivalent.

The charging station for electric vehicles at ICICI Service Centre in Bandra-Kurla Complex, Mumbai.

ICICI Bank’s largest office premise at Gachibowli in Hyderabad, was awarded the ‘Platinum’ rating in the Green Existing Building category by the IGBC* (Indian Green Building Council). The rating is focussed on sustained performance of buildings with respect to the enabling of green features which includes sourcing of 100% electricity from renewable energy sources, 100% recycling and reuse of the waste water, 3-stage high efficiency air filtration system to improve indoor air quality, at least 70% recycling and reuse of food waste and adoption of electric vehicle fleet for transportation. With this, by the end of fiscal 2023, about 4.42 million square feet (34% of the Bank’s total own area) is IGBC green certified, up from 2.28 million square feet at the end of fiscal 2019.

To facilitate the above, in addition to creating awareness within the IMSG and training the relevant team members, engagement with vendors of IMSG was undertaken during fiscal 2023 to create awareness about the Bank's approach on adoption of sustainable practices and to communicate the Bank’s intent to evaluate them on environmental and social factors.

ICICI Bank office at Gachibowli, Hyderabad, rated 'Platinum' by IGBC in 'Green Existing Building' category (inset: IGBC Plaque).

*The Indian Green Building Council (IGBC), part of the Confederation of Indian Industry (CII), is the country’s premier body for green building certification. The ratings are awarded based on assessment of energy efficiency, use of renewable energy, water conservation, waste management, indoor air quality and sustainable sourcing of material. IGBC rating levels (in ascending order) are: Certified, Silver, Gold and Platinum.

Promoting Environment and Sustainability Through CSR

As part of CSR initiatives being carried out through ICICI Foundation, ICICI Bank has extensively supported efforts for environmental protection and improving biodiversity. Projects have been executed in the areas of water conservation, forest conservation and afforestation and protecting biodiversity, which are contributing towards restoring ecological balance in the areas of intervention.

Additionally, projects have been undertaken to significantly abate carbon emissions. These include:

Working with farmers in 600 villages in northern India to stop burning crop residue/stubble that causes significant pollution during October-November every year. Through the efforts, these villages have been freed from pollution caused by the stubble (Parali) burning, and creating a positive impact of abating 1.92 million tonnes of CO₂ emissions and 0.19 million tonnes of carbon monoxide. The impact and emission reduction was assessed by Punjab Agricultural University.
As part of waste management initiatives, about 200 electric vehicles were provided to civic authorities for garbage collection. This averted at least 500 tonnes of CO₂ emissions during the year.

There are several other interventions as part of CSR activities, where the Bank has not evaluated the impact on reduction of GHG emissions.

GHG EMISSIONS IN OWN OPERATIONS

The Bank continued with its practice to get an independent assurance of the Bank’s Scope 1¹ and Scope 2² emissions undertaken. For fiscal 2023, the limited assurance assignment was taken up by DNV Business Assurance India Private Limited for the Bank’s operations being carried out at its towers, data centres, business centres and offices. The limited assurance of Scope 1 and Scope 2 emissions for fiscal 2022 was conducted by TUV India Private Limited.

The Bank’s GHG emissions in its own operations in fiscal 2023 were:

While the Bank is yet to announce a target for carbon neutrality/net zero, the above efforts are a reflection of the deep-rooted commitment to managing the impact of our operations on the environment.

Scope 1 emissions include CO₂ emissions from the combustion of fuel in diesel-generating sets and company-owned vehicles, emissions due to loss of refrigerants and emissions due to CO₂ based fire extinguishers. The emissions from diesel-generating sets was estimated using the spend-based method. The emissions from fire extinguishers and owned vehicles was based on actual consumption.

Scope 2 emissions are due to electricity purchased from the grid. The estimation was based on actual consumption of electricity, and using the grid emission factor published by the Central Electricity Authority, India.

Scope 3 emissions have been estimated for business-related travel by employees through modes like aircraft, train, buses, and cars. Emissions from hotel stay during such travel is not included. As per internal estimates, air travel contributed the highest emissions followed by car travel. For the purpose, DEFRA (Department for Environment, Food and Rural Affairs) 2022 emission factors have been considered.

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tCO₂e - Tonnes of carbon dioxide equivalent.

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One Full Time Equivalent (FTE) employee - One full time employee working on a full time schedule over the year.