AU Small Finance Bank (AU SFB) has announced a strategic partnership with the International Finance Corporation (IFC) to integrate climate risk management into its governance and banking practices, on the occasion of World Environment Day.
The initiative underscores the bank’s commitment to sustainable finance and aims to align its operations with global best practices and regulatory expectations.
Under the advisory program, IFC will assist AU SFB in identifying, quantifying, and managing climate-related financial risks. The collaboration will support the bank in adopting frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) and aligning with the Reserve Bank of India’s climate disclosure guidelines.
The engagement comprises three key components: a physical risk assessment of AU SFB’s loan portfolio based on Intergovernmental Panel on Climate Change (IPCC) projections, a transition risk analysis using Network for Greening the Financial System (NGFS) scenarios, and a calculation of financed emissions under the Partnership for Carbon Accounting Financials (PCAF) methodology for the fiscal years 2024–25 and 2025–26.
The program will be implemented with technical support from StepChange, a specialized climate risk solutions provider, and is backed by the Government of Japan.
Sanjay Agarwal, Founder, MD & CEO, AU SFB, said, “This partnership with IFC represents a strategic inflection point in our sustainability journey. As a values-driven organization, we recognize that climate resilience is integral to long-term financial inclusion. Our goal is to future-proof our portfolio while mobilizing capital for India’s climate transition.”
AU SFB has already demonstrated its climate finance commitment by raising Rs 1,178 crore through its Green Fixed Deposit product, with funds allocated to renewable energy and clean transportation. The bank currently holds a low ESG Risk Rating of 17.1 from Sustainalytics and an AA rating from MSCI ESG.
As of March 31, 2025, AU SFB operates over 2,456 banking touchpoints across 21 states and 4 union territories, serving a customer base exceeding 1.13 crore. The bank reported shareholders’ funds of Rs 17,166 crore, deposits of Rs 1,24,269 crore, and a total loan portfolio of Rs 1,15,704 crore, underscoring its strong financial foundation as it embarks on its 30th year of operations.
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