From its humble beginnings in 1992 as a charitable organisation to its evolution into a regulated small finance bank, sustainability has never been an afterthought at ESAF Small Finance Bank (SFB)—it’s been its essence.
“Sustainability has been embedded in the very DNA of our organisation,” says K. Paul Thomas, MD & CEO of ESAF SFB. Long before ESG was recognised as a global standard, ESAF had already established a dedicated Natural Resource Management department. “Over time, this department evolved into the Sustainable Banking Department when ESAF became a bank. It is committed to overseeing how we deliver long-term value to our customers and stakeholders while adhering to rigorous sustainability standards.”
Therefore, when ESAF Small Finance Bank (SFB) won the Business Today award for India’s Most Sustainable Companies in the BFSI category, it was a clear recognition of its purpose-driven journey.
Today, ESAF SFB boasts an ESG score of 68.1—well above the industry median of 51.8—underscoring its leadership in sustainable banking. From financial inclusion to ethical governance and green finance, the bank’s operations are firmly aligned with the UN’s Sustainable Development Goals (SDGs).
But ESAF’s sustainability journey hasn’t been defined by policy alone. It’s been a steady march of purpose-driven innovation. “Our bottom-up approach has always focused on customer centricity and social impact,” Thomas explains. “By addressing the unmet needs of those at the bottom of the pyramid through deep understanding, ESAF SFB ensures customer loyalty and, thereby, business scalability. This has resulted in a deeper customer connection through customised solutions,” says Thomas.
At ESAF, sustainability is not a checklist. It’s embedded in the bank’s core strategy and everyday operations. The institution actively monitors and discloses ESG performance. Its alignment with the Business Responsibility and Sustainability Reporting framework ensures transparent, benchmarked disclosures.
A dedicated Sustainability Committee at the board level and a cross-functional Sustainable Banking Committee keep the mission alive. Sustainability, tracked through ESG metrics, which are regularly updated, reviewed, and acted upon.
ESAF’s approach is also highly participatory. Continuous dialogue with stakeholders—customers, employees, regulators, and communities—helps the bank evolve its sustainability strategy in sync with ground realities. “Through ongoing dialogue with customers, employees, investors, regulators, and the local community, we incorporate diverse perspectives into our sustainability strategy and respond to evolving expectations,” Thomas says.
ESAF has developed a framework to classify its financial offerings based on their social and environmental impact. Financing for low-carbon enterprises, climate-risk mitigation products, and smallholder farmer solutions all find a place in this sustainable portfolio.
Beyond banking, ESAF is known for its community-led programs like Balajyothi (for children) and Vayojyoti (for the elderly), as well as campaigns around awareness on World Environment Day and Water Day.
What makes ESAF a benchmark in the sector? Thomas credits the organisation’s roots. “We started as an NGO, not as a bank. That legacy of social commitment is foundational.” The bank’s sustainability philosophy, he adds, has always been about transformative action.
Indeed, ESAF’s record speaks for itself. It voluntarily contributes 5% of its net profits to CSR—more than double the statutory requirement. Additionally, employees contribute 1% of their salaries via the Employee Welfare Trust.
From e-signature-based loan processing that reduces paper use to digitisation drives aimed at last-mile connectivity, ESAF fuses sustainability with innovation. “This digital foundation paves the way for future innovations,” says Thomas.
The bank’s efforts align closely with India’s developmental priorities and global SDGs. ESAF also takes pride in its transparency. “As regulators place increasing emphasis on sustainability and ESG compliance, ESAF’s mature sustainability practices place us ahead of the curve. We are well-placed to not only meet evolving expectations but to help shape the policy discourse and lead the way for the industry,” says Thomas.
Its alignment with the SDGs and voluntary CSR contributions enhance ESAF’s appeal to global impact investors and development finance institutions. Its strong community connect allows it to expand into emerging areas such as green micro-enterprises and sustainable agriculture.
With clear metrics, empowered teams, and a legacy of trust, ESAF Small Finance Bank is showing the Indian financial sector what sustainable banking looks like when purpose meets policy. And in doing so, it’s not just building a bank. It’s building a movement.
@teena_kaushal
