Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings Ltd. sheds light on how ESG figures in their scheme of things
With ESG as its core pillar, L&T Finance Holdings Ltd has integrated sustainaibility closely into its operations with well-intentioned plans for carbon neutrality, the circular economy, green supply chains, biodiversity, and green services. In an interview with Outlook Planet, Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings Ltd. shares some significant progress the NBFC has made in the direction. Edited excerpts:
How are you aligned with the parent group’s target to achieve carbon neutrality by 2040?
L&T Financial Services made ESG an intrinsic part of its long-term sustainability programme in 2018, under which measurable goals were established in tandem with our parent group L&T’s sustainability goals framework. We truly believe that focusing on stakeholders, people, and the planet, is not only beneficial to the entire ecosystem, but is in fact a company’s social license to operate. Recognising this, our new 5-year plan ‘Lakshya 2026’ announced this year has ESG as a core pillar, with a commitment to climate leadership, water stewardship, circular economy, green supply chain, biodiversity, green offerings as well as carbon neutrality goals.
At L&T Finance, we are targeting Carbon Neutrality by the year 2035 by pursuing a low-carbon route by incorporating a multi-pronged sustainability strategy for a greener tomorrow. To achieve our Carbon Neutrality goal, we switched to green power for meeting the energy demands of our corporate office in Mumbai and also focused efforts on carbon sequestration.
How is ESG shaping up at LTFS? How has the journey evolved?
The Company’s ESG journey started in 2018-19, making it one of first NBFCs to embrace sustainability at the time. The first year was about extensive preparation and undertaking a detailed gap assessment on sustainability readiness. This exercise not only included a review of the Company’s ongoing sustainability practices but also a study of best-in-class ESG practices among its peers and in the financial services industry. The Company next undertook its first materiality assessment where we engaged with stakeholders to identify a detailed list of material issues to focus on and established a Sustainability Task Force with representation from key functions. In 2019-20, the Company published its first sustainability report. By 2020-21, we started adopting ESG targets and continued to implement a number of ESG initiatives.
The year 2021-22 marked the beginning of a new phase in our ESG journey where significant efforts were made to build an ESG-conscious organisation by adopting an ESG vision and goals. We also set up a Board level ESG committee. We are amongst the first in industry to map BRSR in Sustainability Report from year one itself.
The integration of ESG as a core pillar in LTFH’s Lakshya 2026 business plan, is a testament to the Company’s unwavering commitment to sustainability.
How have you performed on ESG ratings and how is it helping you in business?
According to me, frameworks and ratings are like a universal language that helps communicate the goals and actions that we have delivered against a standard benchmark. I am happy to share that we have performed in the top decile in ‘FBN Diversified Financial Services and Capital Markets Industry’ in the S&P Global Corporate Sustainability Assessment. In fact, we have witnessed a 20- point jump over our FY 19-20 score in that ranking. With a score of 55, we are far ahead of the industry global average of 27 (as on the last score update Nov 12, 2021). We continue to maintain MSCI ‘A’ rating for the last 4 consecutive years* and are also a constituent of the FTSE4Good Index Series.
What are your commitments to achieve water neutrality by FY22, have you been able to meet your commitment?
Water is not only a critical natural resource for operations but also is a material issue for majority of our rural-based customers dependent on an agricultural economy. In alignment with UN Sustainable Development Goal 6- Clean Water & Sanitation, our commitment was to become Water Neutral by FY22 and we have already achieved the same. Rather, we aim to become water positive in FY23 and remain water positive every year going forward.
How have you mainstreamed ESG practices into business, operations and value chain? Could you cite some examples?
Formal and organised finance helps aspirations and enables access to livelihoods within the community, at the same time also educates customers on the importance of building a positive credit history. Therefore, ESG considerations is actually embedded in our processes across the credit lifecycle. Our products in turn enable customer needs for finance and this is reflected in our lending businesses including rural business finance (erstwhile micro loans), mobility and renewable energy generation financing. The Rural Finance portfolio promotes financial inclusion and boosts economic productivity at the grassroot level.
The Company’s digital and data analytics backbone has especially enabled us to disburse loans in areas where historically access to credit was non-existent or helped approve loans to ‘new-to-credit’ customers, an earlier ignored segment, thereby being a critical partner in creating an inclusive financial ecosystem.