Written By Rusen Kumar
MUMBAI:YES BANK, country’s fifth largest private sector bank, has joinedCarbon Pricing Leadership Coalition(CPLC) initiative led by the World Bank Group. Bank will leverage multi-stakeholder, multilateral partnership for building capacity and expanding the space for effective climate action. YES BANK looks carbon price can play a bigger role in defining business decisions in the future.
In an interview withRusen Kumar,Editor of IndiaCSR;Namita Vikas, Group President and Chief Sustainability Officer, YES BANKshared YES BANK’s mission onCarbon Pricing Leadership Coalition and trend in India.Here are the edited excerpts of the interview:
What are the key purposes behind the signing of Carbon Pricing Leadership Coalition?
The Carbon Pricing Leadership Coalition, a first of its kind voluntary partnership of national and sub-national governments, businesses and civil society organizations, is led by the World Bank Group. YES BANK believes that putting a price on carbon, either through carbon tax, carbon trading, or other mechanisms, may enable businesses to recognize the cost of GHG emissions from their business activities, and thus motivate towards decarbonization. YES BANK, in its leadership role in the Indian banking sector on climate action, has joined this global coalition to leverage multi-stakeholder, multilateral partnership for building capacity and expanding the space for effective climate action. We aim to build momentum of Carbon Pricing in India and strive to mainstream it among the Indian BFSI space.
Why Carbon Pricing is becoming important issue for the country like India?
A uniform carbon price policy in India (and prices on other greenhouse gases in proportion to their warming potential), delivered either by carbon taxes or through carbon trading, may be an ideal tool to reduce greenhouse gas emissions sharply in a cost-effective way. This is based on the principle that the ‘polluter pays’ and could evolve businesses into creating shared value.
- Placing a uniform carbon price may be difficult to implement and achieve across industries, but it can become a vital yardstick to assess actual policy measures related to carbon mitigation strategies as committed through India’s Nationally Determined Contributions.
Can you elaborate ‘putting a price on carbon’ and its relevance to India economy?
The recent decline in international oil prices is seen by many as an opportunity to rationalize the energy prices by getting rid of the distorting subsidies whilst shifting taxes towards carbon use. The recent move by the Government of India to de-regulate diesel prices, while at the same time increasing excise duty on petrol and diesel periodically, to match the declining global prices, reflects a proactive stance in this direction. For example, recently, the coal cess was doubled from Rs 200 per ton to Rs 400 per ton, adding to the set of green actions taken by the government. This is an implicit carbon tax—by putting an effective price on emissions due to coal usage. A price on carbon could act as pervasive encouragement for businesses, to adjust their capital investments, their mix of resource inputs, and encourage innovation to move away from greenhouse-gas intensive technologies. Subsequently, in the downstream, the effective high selling price may nudge consumers to reduce spending on products linked to high emissions.
How YES BANK, as a financial institute, can be benefiting from the ‘putting a price on carbon’ trend?
At YES BANK, we see carbon price playing a bigger role in defining business decisions in the future. Given the catalytic role of banks in financing development and infrastructure, this results in financed emissions, and gaining greater understanding of carbon may not only help YES BANK reduce its climate risk, but also may place it in a position to support its clients in reducing their climate risks, in the following ways:
- Learn and better assess the bank’s carbon liability in a macroeconomic scenario
- Price carbon internally to optimize operations and de-risk investment decisions
- Select carbon free assets and practices, to build portfolio resilience and achieve innovation both internally and across the wider economic landscape at a faster rate
Can you explain recent development in the area of effective carbon pricing framework in India?
India has been rationalizing subsidies and increasing taxation on fossil fuels (petrol and diesel), thus, turning a carbon subsidy regime into one of carbon taxation. However, there is still a long way to go, with potential gains to be reaped from reforms in coal pricing and petroleum pricing policies. On the whole, the move to substantial carbon taxation, the proceeds of which are expected to be ploughed into climate action, combined with India’s ambitious Renewable Energy program suggests that India can make substantial contributions to the effective carbon pricing framework development.
Do you have any specific target under Carbon Pricing Leadership Coalition at YES BANK?
Being CPLC member, YES BANK is reviewing its position for contributing actively in the three working groups of CPLC, such as ‘Building and Sharing the Evidence Base’, ‘Mobilizing Business Support’ and ‘Leadership Dialogues’. The internal policy development and analysis to put carbon pricing in YES BANK’s operation is under consideration and we may consider taking target-based commitments accordingly.
Do you see that, joining CPLC is part of your CSR and sustainability strategy?
YES BANK remains committed to playing a leadership role in the Indian banking sector in climate action. Its role in the CPLC may further add to its active thought leadership and policy advocacy towards developing an effective carbon pricing framework in India. By joining CPLC, the Bank as a part its mainstream Responsible Banking strategy, may be motivated to demonstrate significant leadership as first movers among our Indian banking peers to consider carbon pricing into lending operations.
What kind of important role YES BANK will be playing in Carbon Pricing Leadership Coalition for India?
As a strategic partner of CPLC in India, YES BANK may like to mobilize business support and provide policy advocacy to pertinent ministries and departments of the Indian Government, towards developing effective Carbon pricing framework development in India.
How sustainable development is at the centre of business agendas of organizations for sustained economic growth?
Organizations looking at ensuring sustainable business growth can no longer ignore to positively impact and contribute towards the overall sustainable development mandate. We believe that sustainable business lies at the heart of sustainable development and is the only option for building a safe and resilient world. We are seeing how committed organizations are adding long term value to society, and are differentiating themselves in the market place based on their strong sustainability mandate. Fundamentally, there is a level of confidence associated with companies with strong sustainability practices and policies. The benefits are many, such as stronger goodwill, better stakeholder perception and lower risks.
YES BANK – Sustainability Report:https://www.yesbank.in/about-us/investor-relations/yes–bank–sustainability-report