YES BANK Earns ESG Score of 80.5 Amid Governance and Compliance Shadows

YES BANK has achieved an adjusted Environmental, Social, and Governance (ESG) score of 80.5 for FY 2024-25. This marks a marginal increase of 0.1 points from the previous fiscal year's score of 80.4.

Reader Takeaway: Strong governance score (85) and improving ESG metrics contrast with ongoing compliance and board structure concerns.

What just happened (today’s filing)

YES BANK announced it has received an ESG score of 80.5 for the financial year 2024-25. The rating was assigned by SES ESG Research Pvt. Ltd., a SEBI-registered ESG Rating Provider.

The score was determined through an independent assessment based on the bank's public disclosures. Notably, YES BANK stated that it had not engaged SES ESG for this specific rating, emphasizing the independent nature of the evaluation.

The score reflects pillar performances: Environmental at 88, Social at 78, and Governance at 85. The bank highlighted efforts in renewable energy financing and financial inclusion as key environmental and social drivers.

Why this matters

In an era where Environmental, Social, and Governance (ESG) factors are increasingly critical for investors and stakeholders, this rating provides a benchmark for YES BANK's sustainability performance. A strong ESG score can influence investor sentiment, access to capital, and the bank's overall reputation.

However, the score's context is crucial, as it is accompanied by disclosures on significant governance and compliance issues that could potentially offset positive ESG perceptions.

The backstory (grounded)

YES BANK has a history marked by significant governance challenges. In 2020, the bank faced a severe crisis attributed to mounting non-performing assets and governance lapses, necessitating an RBI-mandated reconstruction scheme. Prior to this, in September 2018, the RBI curtailed CEO Rana Kapoor's tenure due to governance concerns. The bank has also faced regulatory penalties in recent years for compliance issues.

SES ESG Research Pvt. Ltd. is a SEBI-registered ESG Rating Provider, operating under a 'Subscriber Pays' model, and has been providing ESG ratings since 2018-19.

What changes now

Investors and analysts will scrutinize the ESG score alongside the reported governance and compliance issues. While a score of 80.5 positions YES BANK within a 'Low' risk footprint according to SES ESG's methodology, the persistent concerns may deter socially responsible investors or affect the cost of capital.

The bank's commitment to improving disclosures and addressing these identified risks will be key to enhancing its overall ESG standing and market perception.

Risks to watch

• Board Compliance: YES BANK's board composition is non-compliant with Section 152 of the Companies Act, 2013, due to insufficient directors liable to retire by rotation.
• Regulatory Penalties: The bank faced significant RBI penalties, including ₹91 lakh in May 2024 for customer service and account operation breaches, and ₹29.60 lakh in May 2025 for misreporting customer complaints in FY23-24. The filing also refers to 10 instances of non-compliance resulting in a ₹91,85,000 penalty.
• Data Privacy: 28 complaints related to Data privacy were reported during FY 2024-25.
• Sexual Harassment: 30 complaints related to Sexual harassment were reported during FY 2024-25.
• Employee Turnover: A high permanent employee turnover rate of 35.50% was noted.

Peer comparison

While specific comparable ESG scores from SES ESG for peer banks for FY25 are not readily available, general trends indicate that Indian banks often exhibit stronger ESG performance than NBFCs due to regulatory oversight and governance standards. Peers like HDFC Bank, ICICI Bank, and SBI are also actively engaged in ESG initiatives, facing similar pressures regarding regulatory compliance and sustainability reporting.

Context metrics (time-bound)

• The adjusted ESG Score for YES BANK for FY 2024-25 is 80.5, representing a 0.1 point increase year-over-year from FY 2023-24.
• The Governance score stands strong at 85, with Environmental at 88 and Social at 78.

What to track next

• YES BANK's efforts to rectify board composition non-compliance with the Companies Act, 2013.
• The progress made in addressing data privacy and sexual harassment complaints.
• Future ESG ratings and disclosures from SES ESG and other rating agencies.
• Any further regulatory actions or penalties from the RBI.
• The bank's strategy for improving employee retention and its impact on social metrics.