Project Details
Project
HDFC Bank Sustainable Finance Framework Second-Party Opinion (2023)
Client
HDFC Bank Ltd.
Project Type
Sustainability Bond/Loan
Industry Group
Banks
Use of Proceeds
Renewable energy; Energy efficiency; Pollution prevention and control; Water/waste water management; Natural resources/land use management; Sustainable aquaculture/fisheries; Clean transport; Climate change adaptation; Green buildings; Food security; Employment generation and Socio-economic empowerment; Eco-efficient products; Access to essential services; SME finance and microfinance; Socio-economic advancement; Affordable basic infrastructure;
Location
India
Evaluation Date
Dec 2023
Evaluation Summary
Sustainalytics is of the opinion that the HDFC Bank Sustainable Finance Framework is credible and impactful and aligns with the Green Bond Principles 2021, Social Bond Principles 2021, Sustainability Bond Guidelines 2021, Green Loan Principles 2023 and Social Loan Principles 2023. This assessment is based on the following:
USE OF PROCEEDS
The 16 eligible categories for the use of
proceeds1 are aligned with those recognized by the Green Bond
Principles, Social Bond Principles, Green Loan Principles and Social
Loan Principles. Sustainalytics considers that investments in the
eligible categories will lead to positive environmental or social
impacts and advance the UN Sustainable Development Goals,
specifically SDGs 2, 3 ,4, 6, 7, 9, 11, 12, 13, 14 and 15.
PROJECT EVALUATION AND SELECTION
HDFC Bank’s Product
Responsibility Group under the Bank’s Apex Council will act as the
ESG working group, which will be responsible for project evaluation
and selection in accordance with the eligibility criteria of the
Framework. The ESG working group comprises representatives from
the Bank’s Risk Management, ESG, Treasury, Credit and Credit
Administration departments. The Bank has developed an ESG Risk
Management Policy to assess the environmental and social impacts
of loans, categorize risks and implement risk mitigation and
management measures. Sustainalytics considers the environmental
and social risk management system and the project selection
process to be adequate and aligned with market practice.
MANAGEMENT OF PROCEEDS
HDFC Bank’s ESG working group will
oversee the management of proceeds and has internal tracking
mechanisms in place to track and monitor the allocation of proceeds
for the ESG instruments issued under this Framework. The Bank
intends to allocate net proceeds within 36 months of issuance.
Pending allocation, unallocated proceeds will be temporarily held in
money market instruments such as liquid securities and cash and
cash equivalents. This is in line with market practice.
REPORTING
HDFC Bank commits to report on allocation of proceeds on an annual basis until full allocation on its website. Allocation reporting will include the eligible projects and assets, the amount of proceeds to be allocated to the eligible projects and assets, the amount of unallocated proceeds and the share of financing versus refinancing. In addition, HDFC Bank intends to report on relevant impact metrics. Sustainalytics views HDFC Bank’s allocation and impact reporting as aligned with market practice.