Mapping Garment Industry Funding in India
This report seeks to establish the groundwork for a long-term empirical study of the funding patterns of the garment export industry in India. As an entry point, this report sets the context by delving into the working conditions prevalent among the representative sample of 36 garment companies.
We have analysed the financial plumbing of these garment companies from FY 2017-18 – i.e., the 10 banks which were found to be linked as lenders to these companies. Using regulatory filings on responsible financing and a bespoke benchmark for garment sector financing, the Report scores each bank on their public ESG reporting.
We find that the garment companies consistently rely on loans from banks and that banks have a considerable interest in the garment sector, averaging around INR 660 crores in their exposure to our sample set. The existing reporting requirements (under the Business Responsibility Reporting process) alos do not go far enough to provide a reliable picture of how ESG principles were satisfied before the sanction of loans.
The banks in our sample set, on average, displayed a match of only around 27 percent to the benchmark requirements. These findings aim to provide a bird’s eye view of the gap between ESG reporting and ensuring sustainable outcomes for the Indian banking sector when it lends to garment sector companies. Finally, the report provides a set of next recommendations for various stakeholders to strengthen and make ESG reporting effective.
Originally posted on the website of Fair Finance India - https://fairfinanceindia.org/bank-guide/reports/mapping-garment-industry-funding-in-india/