Since its inception in 1997 IDFC has mainstreamed environmental and social risk management into its business operations by instituting a dedicated Environment Risk Group (ERG) reporting to the Chief Risk Officer and having a best in class Environment & Social Due Diligence and monitoring mechanisms for its lending operations and alternate assets businesses. IDFC’s E&S policy ensures that its lending is made to environmentally sustainable, socially acceptable and economically viable projects. Project environmental and social risks are suitably addressed throughout the investment tenure. IDFC continually engages with its clients for implementing enhanced environmental and social safeguard measures.
IDFC adopted the Equator Principles on 3rd June 2013. It was the first Indian financial institution to do so. The Equator Principles are a credit risk management framework for identifying, assessing, and managing environmental and social risk in project finance. IDFC has therefore re-aligned its E&S systems and procedures to the principles as espoused by the Equator Principles Association.
IDFC’s rigorous E&S policy along with its commitment to the Equator Principles (EP) serves as a solid foundation for screening transactions, advising our clients and promoting sustainable ways of doing business.
The ERG’s Environmental and Social Monitoring and Review mechanism includes periodic site visits to project sites, discussions with clients, review of regulatory compliance and implementation of Health and Safety procedures at project sites, work place amenities for labour and implementation of environmental and social mitigation measures to ensure effective E&S Risk Management of portfolio projects.
IDFC is also an active contributor and participant in various sustainability fora like ASRI, Carbon Index at BSE, GRI and CDP, thus communicating and sharing its robust E&S Risk management practices through sustainability focused initiatives and stakeholder engagements.
IDFC also reports annually to multi-lateral agencies that include International Finance Corporation (IFC), Asian Development Bank (ADB) and DEG (KfW Bankengruppe) on projects assisted through their lines of credit, as also to UN Global Compact, Carbon Disclosure Project and United Nations Principles for Responsible Investment (PRI).
Sustainable Infrastructure Development
IDFC is a thriving example of thought leadership and advocacy on sustainability for emerging economies. IDFC helps to translate policy initiatives into actual implementation through specific projects in the public private partnership model and promotion of sustainable practices in project development and operation. IDFC's "Green" Portfolio encompasses project lending to Renewable Energy projects and developing and owning renewable energy assets. IDFC engages with the local community through rural infrastructure development, livelihood support and adoption of sustainability practices across its operations.
IDFC’s alternative assets business has already emerged as the largest investor in low-carbon businesses in India. Delhi Integrated Multi Modal Transit System Ltd. (DIMTS) is a Joint Venture Company between IDFC and the Government of Delhi National Capital Territory engaged in providing innovative urban transport solutions to Delhi Metropolitan region. IDFC has also assisted the Municipal Corporation of Delhi (MCD) in enabling private sector participation in the city’s municipal waste management.
IDFC frequently focuses on crucial and urgent issues such as land acquisition, climate change and water through its policy advocacy initiatives.
In order to promote low carbon economy projects in India, IDFC is actively working with government agencies, other financial institutions and industry associations like CII and FICCI on formulating innovative financing mechanism for attracting greater private sector investment in the low carbon sector.
We have initiated the Inclusive Infrastructure Fund, a small corpus formed out of our own funds to support social enterprises and innovative environmental projects.
The Fund made its first equity investment in Ziqitza Healthcare Ltd., a company that provides emergency response ambulance services under an innovative business model where better-off patients cross-subsidize poorer patients. Through this fund we have also approved a second investment in a company that imparts civil construction skills to unemployed rural youth and places them directly with construction companies after training.
We are considering several other investment opportunities in areas such as rural solar lighting, municipal solid waste based biomethanation plants and innovative rural community sanitation upgradation systems.
Environmental and social performance
At IDFC we firmly believe that small steps go a long way in saving the environment. IDFC's gauges both its internal and external E&S performance.
Internal performance is gauged through resource conservation, reduction of the carbon footprint and employee engagement in IDFC’s environmental and CSR initiatives. IDFC measured its carbon footprint for the first time in FY 11 and this will constitute the baseline for subsequent monitoring and reduction, the ultimate objective being to make IDFC a carbon neutral organisation. The Environmental Investment Organisation, a UK-based non-profit organization ranked IDFC as the top Indian firm for levels of transparency related to greenhouse gas emissions and carbon intensity. IDFC’s active volunteering program is aimed at sensitizing our employees towards environmental and social issues and is just another small step towards preserving our planet.
Externally ERG undertakes detailed E&S due-diligence of projects under consideration and identifies project specific environmental impacts and their corresponding risks and requisite mitigation measures.
IDFC is one of the 50 companies included in the S&P ESG India Index that measures 50 of the best performing stocks in the Indian market as measured by environmental, social and governance parameters.
Environment policy framework
Under the "Go Green" initiative, we have launched an internal environment policy aimed at minimizing the environmental impact and carbon footprint of our projects. We are on course for obtaining the US Green Business Council's LEED Gold Certification (Commercial Interiors) for our new office at Chennai and (possibly India's first) certification for an Energy-Efficient Data Centre from TUV Rhineland, Germany.
Carbon footprint is a measure of the impact that any organization's activities have on the environment and in particular climate change. It is expressed in tonnes of carbon dioxide (CO2) emitted equivalent (tCO2e) and is reported under three categories:
Scope 1: Emissions from company owned or operated GHG sources
Scope 2: Emissions from assets owned by others but energy is bought by the company
Scope 3: Emissions other than Scope 2 that are a consequence of an organization's activities, but arise from greenhouse gas sources controlled by other organizations (non mandatory reporting).
IDFC is committed to building a sustainable future, and, therefore, is focused on reducing the carbon intensity of its operations. It will use ratios (tCO2e/ Operating Income & tCO2e / PAT) to measure the incremental emissions for every rupee of revenue generated and profit generated respectively and will endeavor in increasing its resource use efficiency in each succeeding year.
IDFC has been assessing its carbon footprint from its operations since 2011 with the aim of becoming a carbon neutral organization in future. IDFC's Carbon footprint assessment for FY14 has been done as per ISO-14064standard and verified by the SGS India Pvt. Ltd.. The carbon footprint for IDFC in FY14 is as given in Table below:
|FY 2014||FY 2013||% Variation|
|Total tCO2e /op income (in Crores)||2.22||2.251||1.42%|
|Total tCO2e /PAT (in Crores)||4.59||4.252||8.11%|
The above variation in carbon footprint is mainly due to change in emission factors as revised by Central Electrical Authority and a slight increase in air travel. However, energy conservation measures have been undertaken at our various office premises, which includes use of double glazed windows, minimum use of paper printings, use of recycled material, green IT, use of video conferencing to avoid air travel, e-forms for applying in mutual fund investments, e-statements for mutual fund investors, e-annual reports, etc in order to reduce our carbon footprint.