Union Bank of India – Nayan Mane – 2025
Summary
Nayan Arun Mane developed a climate scenario analysis tool based on the Network for Greening the Financial System (NGFS) framework to quantify transition risks for Indian companies in hard-to-abate sectors, such as cement, steel, and chemicals, as well as for the banks that finance them.
Goals
As a Climate Corps Fellow at Union Bank of India’s ESG Cell, Nayan Arun Mane, an MPP Candidate at IIT Delhi’s School of Public Policy, was tasked with assessing how climate transition risks could affect Indian banks’ credit exposure to high-emitting sectors. His project aimed to bridge global climate pathways and firm-level financial data, enabling the bank to quantify the potential impact of carbon pricing and energy cost shifts on borrowers’ financial stability.
Solutions
Nayan designed and implemented an Excel-based NGFS Scenario Analysis Tool that integrates firm-specific balance sheet data with transition pathways for carbon-intensive industries, such as cement, steel, and chemicals. The model projects future emissions, carbon costs, and leverage under multiple NGFS scenarios, including Net Zero 2050 and Nationally Determined Contributions. It also estimates how decarbonization investments, such as carbon capture or green hydrogen, affect each firm’s probability of default (PD). Nayan constructed regression models using 1,500+ firm-year observations from Indian listed companies to statistically link leverage, assets, and costs to default risk. The resulting tool provides interactive, company-level outputs that allow Union Bank of India to compare baseline and mitigation scenarios and evaluate climate-aligned lending strategies.
Potential Impact
The scenario analysis tool equips Union Bank of India with a practical framework to quantify and manage climate-related credit risks in hard-to-abate sectors. By integrating NGFS data and firm-level financial indicators, the tool highlights how decarbonization pathways can alter borrowers’ default probabilities and capital requirements. Its adoption supports the bank’s broader ESG and TCFD alignment goals, enabling more resilient portfolio management. In the long term, the model enhances the financial sector’s capacity to price climate risks and promote low-carbon transition finance in India.
