Can HR Drive ESG in Banks? Unveiling the Role of Green HRM in Shaping Sustainable Development

Green Human Resource Management (GHRM) refers to the application of environmental sustainability in HR practices. Indian banks are adopting GHRM practices to reduce their carbon footprint and promote eco-friendly initiatives. Banks are taking initiatives to cover maximum buildings certified by Indian Green Building Council.

- M. Lavanya

Introduction

The increasing importance of Environmental, Social, and Governance (ESG) criteria in business operations reflects global shifts toward sustainability, responsible business practices, and long-term stakeholder value creation. India's banking sector is at a pivotal moment in its journey toward sustainable development. Within this broader framework, Human Resources (HR) plays a critical role in fostering a culture of sustainability, inclusivity, and ethical governance. ESG integration in HR practices is no longer just a corporate buzzword but a necessary pathway for Indian banks to ensure they align with national and global sustainability objectives.

The Rise of ESG in India's Banking Sector

The banking sector, traditionally known for its financial services, is increasingly being scrutinized for its environmental footprint, social responsibility, and governance practices. As of 2023, India's banking sector is undergoing significant transformations, prompted by both regulatory frameworks and the growing demand for sustainable financial practices. According to a report by India Ratings and Research (2023), over 80% of India's large banks have incorporated ESG strategies into their operations.

The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have been crucial in pushing for ESG disclosures and performance tracking. For instance, in 2021, SEBI mandated that the top 1000 listed companies in India must disclose their ESG practices under a standardized format. As a result, financial institutions are now actively incorporating ESG principles into their operations to meet these regulatory requirements and maintain their competitiveness in a rapidly evolving market.

ESG Integration in Human Resources

Environmental Integration: Green HRM