British lender HSBC on Thursday launched a “green deposit” product with an explicit commitment to on-lend the accrued inflows to finance environmentally sustainable initiatives like renewable energy projects.
The facility is available only to corporates and in a term deposit format, the bank, which has been in India for over a century, said.
Financing of ecologically sensitive and sustainable initiatives has been a big concern given the higher investments needed for them upfront.
A few products like “green bonds” which are subscribed by investors committed to such themes have been successfully tested in the past, while other moves like disincentivising funding for polluting projects through moves like higher provisioning requirements have also been mooted in the past.
“It is becoming increasingly obvious to business leaders that sustainability is a strategic business imperative,” the bank’s head for global banking and markets Hitendra Dave said.
He said the bank can use its expertise and resources to support its clients’ journey towards embedding sustainability as a strategic priority and added that the proposition is designed to help corporates participate in the sustainability agenda with the safety and assurance of a bank deposit.
The fixed tenure deposits through the product will go towards financing eligible businesses and projects that promote the transition to a low-carbon, climate resilient and sustainable economy, an official statement said, adding like any other deposit, it offers stable, pre-agreed returns.
The bank said it will provide customers with a quarterly report containing portfolio-level information regarding the use of the deposited funds.
Corporates looking for inclusion of sustainability agenda into their treasury activities or those that have limited opportunities for investment in environmentally beneficial projects can find this product relevant, it said, claiming that there has been a demand for increased transparency and accountability on the environmental impact of businesses by a growing segment of stakeholders.