IDFC First Bank Ltd

Enabling Sustainability Responsibly

31% of the Bank's total infrastructure

(carpet area) is now green certified by the

Indian Green Building Council (IGBC).

Dear Stakeholders,

It is my pleasure to report to you on the progress we have made on IDFC FIRST Bank's ESG journey. From its very inception, IDFC FIRST Bank has operated with a view to creating, nurturing and preserving value for all its stakeholders, including society and the environment. The Environmental, Social and Governance (ESG) function was formalized in the Bank in 2022, to give effect to the rising stakeholder asks on ESG and to integrate sustainability in everything the Bank does.

We are living in a world where humanity is using resources at a pace much faster than the speed with which earth can regenerate them. While there are tangible and critical environmental and social costs to this, there is a clear economic impact as well – estimates indicate a negative impact of USD 2.7 trillion annually by 2030 on the global GDP arising from the collapse of natural ecosystem. To bridge this, sustainable finance has to take centre stage. At a minimum, USD 500 billion is needed annually in affordable, long-term finance to meet the UN Sustainable Development

Goals (UNSDGs).

India stands at a pivotal juncture in its sustainability journey. As the world's third-largest emitter, yet one of the fastest-growing economies, the country has committed to achieving

Net Zero by 2070 and meeting 50% of its energy requirements from renewable sources by 2030. With a banking system exceeding Rs.250 trillion in assets, financial institutions are uniquely positioned to drive this transition. The Government of India and key regulators such as SEBI and RBI have introduced progressive ESG mandates, including the BRSR framework and guidelines on climate-related risk disclosures. These developments signal a decisive shift toward embedding sustainability at the core of economic and financial policy, encouraging businesses to not just comply but lead with purpose. The draft green taxonomy for India is also a welcome move.

IDFC FIRST Bank's ESG approach is informed by this larger operating context and primarily straddles three key priorities. These include integrating ESG into the Bank's products and services; building a culture of sustainability within the organization; and driving initiatives that can create large-scale impact. The Bank is also focused on ensuring that its sustainability and reporting practices are aligned with national and global standards.

One of the key requirements of ESG has been to ensure statutory compliance with asks from SEBI and RBI, through reports such as the Business Responsibility and Sustainability Report (BRSR). In FY 2022-23, the Bank prepared its first BRSR, aligned with SEBI requirements

In fact, the Bank took a step further and voluntarily aligned itself with global reporting frameworks, such as Integrated Reporting, GRI, and SASB. The Bank continued its BRSR and Integrated Reporting practices in FY 2023-24 and FY 2024-25, further obtaining reasonable assurance on its core ESG KPIs from a competent third-party. As an official supporter of the Task

Force on Climate-Related Financial Disclosures (TCFD), the Bank also published its TCFD report and updates on its website. The Bank continues to be scored by external ESG rating agencies, with its performance showing an uptick across the board. As a result of its initiatives, the Bank has been able to significantly improve its ESG ratings, finding a place among the top-rated peers in the Indian banking industry. In S&P CSA (DJSI), the Bank improved its

It is worth noting that the Bank has achieved these ratings within a relatively short span of time. This is a result of strong benchmarking, dedicated initiatives, alignment to global and national standards of reporting, and public ESG commitments.

One of the biggest challenges facing the world today is climate change, which is rapidly becoming a global crisis. Governments, economies, and public and private institutions are implementing large-scale changes to mitigate the effects of climate change.

IDFC FIRST Bank's decarbonization efforts are guided by its Board-approved GHG Emissions Management Policy. The Bank has proactively undertaken a dedicated climate action project spanning three pillars – Baselining of GHG emissions, Computation of the Bank's financed emissions, and Charting a glide path for the Bank's 2050 Net Zero journey with decarbonization targets. This has particularly helped in estimating the Bank's overall carbon footprint and giving a view on the possible strategy the Bank can adopt in decarbonizing its portfolio and operations. This will also help the Bank align with emerging regulations from the RBI, which seek disclosure from banks on their climate action.

The Bank is also among the first financial institutions in

India to become a signatory to the Partnership for Carbon Accounting Financials (PCAF), the global body that guides the estimation of financed emissions.

With an objective to spread awareness, the Bank's ESG team hosts events, quizzes, campaigns, and panel discussions, accelerating awareness among employees regarding aspects of ESG. The Bank also has a mandatory ESG training module for all employees.

In FY 2024-25, 12 ESG themes were adopted across 12 months, with topics ranging from environmental awareness to data security to financial inclusion. The employees also participated in carbon footprint workshops, upcycling activities, and attended expert sessions on sustainable living. These initiatives aim to foster a culture of sustainability within the Bank and among its employees. To accelerate the adoption of sustainable mobility, the Bank offers EV charging to its employees in four locations and reduced interest for employees on EVs and Hybrid vehicles (under the Company-Owned Car Policy).

In FY 2024-25, 12 ESG themes were adopted across 12 months, with topics ranging from environmental awareness to data security to financial inclusion.

On the customer side, the Bank continues to uphold its ‘Always You First' philosophy, offering transparency and ethical banking as standard. Several of its business lines are naturally ESG-aligned, such as EV financing (a live portfolio of 2.3 lakh 2-wheeler EVs and 6,400+ 3-wheeler

EVs), rural lending, agri-lending, and others. Additionally, during FY 2024-25, the Bank also launched solar financing through its business lending division. On the liabilities front, the Bank has launched ‘Green Deposits', aligned with the RBI Framework, which is seeing increasing traction. All proceeds from Green Deposits are directed towards green activities such as EV financing.

To ensure that customers can also participate in its green initiatives, the Bank has planted a tree for every new home loan and green deposit. In FY 2024-25, the Bank planted over

25,000 native saplings through this initiative, contributing to the creation of a mini-forest in Madurai, Tamil Nadu.

A key tenet of successful ESG implementation is collaboration. The ESG team of the Bank benchmarks industry best practices and internally works with different departments to ensure that the Bank is aligned with its peers. This includes creation of policies, systems, processes and governance across all initiatives. For example, from an operational perspective, the Bank is concentrating on making its infrastructure greener and sustainable. In fact, 31% of the Bank's total infrastructure (carpet area) is now green certifiedby the Indian Green

Building Council (IGBC). This includes the Bank's Corporate

Head Office in Mumbai, which is rated as IGBC Platinum. Aligned with its decarbonization plan, the Bank has also adopted green power in three^* of its offices in Mumbai. The Bank is further evaluating other locations where

In FY 2024-25, the Bank planted over 25,000 native saplings throughthisinitiative,contributing to the creation of a mini-forest in Madurai, Tamil Nadu.

the ecosystem has developed to enable green power procurement. These initiatives are aimed at reducing the Bank's overall environmental footprint. As a result of the Bank's initiatives and commitment to ESG best practices, it has won several awards, including the Outstanding Private Bank in Green Finance by AFAI and the Product Innovation Award at the Climate Innovation Awards by Times Now in FY 2024-25. In FY 2023-24 the Bank had won the coveted ‘Golden Peacock Award for ESG (National)'.

ESG is a long-term journey that starts with a vision to do the right thing and finding opportunities at every juncture to leave a positive footprint behind. To achieve this, the Bank is working towards several key goals.

The Bank will continue to align with all regulatory and compliance requirements, together with benchmarked

ESG reporting. Further, in FY 2025-26, the Bank expects to accelerate its initiatives towards building a culture of sustainability through targeted sessions for employees. The Bank would also continue to focus on environmental resource efficiency and decarbonization efforts.

On a regular basis, the Bank will evaluate opportunities and risks emerging from the ESG landscape, and work on feasible areas. It expects to delve deeper into sustainable finance as a domain, where it can find adjacencies with existing business lines. A base for this is already being built, with products such as green deposits and solar financing already rolled out to the market. This would enable the Bank to offer more purpose-led products to its customers, create consistent win-win situations and social impact, and reduce the environmental footprint of its lending activities at large. With the support of all stakeholders, and the guidance of our esteemed Board and Management, we remain firmly committed to maximize positive impact and drive long-term value.