Examining the portfolio carbon footprint of Indian banking system

This paper examines the portfolio carbon footprint of Indian banking system. To this end, we combine the emissions data from India's Biennial Update Reports to UNFCCC and Reserve Bank of India's bank database from 2010 to 2016; apply Network for Greening the Financial System's backward-looking methodology and Partnership for Carbon Accounting Financials Standards in conjunction with Leontief's Input-Output technique to estimate the weighted average carbon intensity (WACI) of bank's loans portfolio at three levels - System level, Bank group level and Spatial level. Our major findings include-first, at system level, the carbon footprint of Indian banks shows a rising trend over the study period with the aggregate WACI of bank loans increasing by 9.4% from 332.5 tCO2e/US$ million in 2010 to 363.7 tCO2e/US$ million in 2016. Second, at the group level, while the financed emissions of public sector banks have plateaued, for private sector banks they have nearly doubled during the study period, suggesting the increased exposure to carbon intensive assets. Third, on the spatial level, top five regions by WACI include Delhi, Maharashtra, Gujarat, Tamil Nadu, and Telangana in descending order.