ESG Performance and Bank Lending in High-Carbon Industries: A Comparative Analysis of Two Indian Cement Firms

Abstract

This study examines the critical relationship between Environmental, Social, and Governance (ESG) performance and bank lending patterns within high-carbon industries, placing a specific focus on the rapidly evolving Indian cement sector. As global financial systems increasingly integrate sustainability metrics into risk assessment frameworks, understanding these dynamics becomes essential. Through a comprehensive comparative analysis of two major Indian cement firms, namely UltraTech Cement and ACC Limited, the research systematically investigates how varying levels of ESG disclosure and concrete sustainability practices directly influence corporate credit access, specific loan terms, and overall lending decisions by major financial institutions. The analysis employs a robust mixed-methods approach that seamlessly combines quantitative financial data spanning from 2018 to 2023 with an in-depth qualitative assessment of annual ESG reports and mandatory sustainability disclosures. The empirical findings clearly indicate that superior ESG performance strongly correlates with significantly more favorable lending terms, including notably lower interest rates, extended loan tenures, and substantially reduced collateral requirements. However, the relationship exhibits distinct sector-specific nuances; notably, environmental performance metrics demonstrate a much stronger and more immediate influence on bank lending decisions than either social or governance indicators. Ultimately, this study contributes significantly to the emerging academic literature on sustainable finance within emerging markets. Furthermore, it provides highly practical, actionable insights for regulatory policymakers, commercial financial institutions, and strategic corporate managers who are actively navigating the complex transition toward sustainable, low-carbon economies.