ENVIRONMENTAL AND SOCIAL RISKS IN PROJECT FINANCING: EVIDENCE FROM INDIA

Research Team: Koyel Mandal, Vivek Venkataramani
LEAD Centre: Centre for Development Finance (CDF)
Focus Area: Environment & Climate Change
Project Geography: India
Partner: ICICI Bank Technology Finance Group
Status: Completed

Background:

Sustainable finance begins with recognizing the sources of risks – be it financial, social or environmental. Internationally, examples abound of companies or projects that have been shut down or heavily penalized as a result of adverse environmental and social impacts. Financial institutions that invest in such projects face a multitude of risks – from credit and collateral to legal, regulatory and reputational risks. The threat of such penalties creates a strong incentive to integrate environmental and social risk assessment and management into their risk management processes. In the last decade or so, there have been similar cases in India as well. This report compiles some such case studies of developmental projects in India that have been affected by environmental and social impacts arising out of the project activities.

REPORT: Environmental and Social Risks in Project Financing: Evidence from India