Muthoot Microfin Achieves Highest ESG Rating with 72.2 Score from CareEdge

Muthoot Microfin Limited, one of India's top microfinance companies, has received a high ESG rating of 72.2 from CARE ESG Ratings Limited. It has been rated the highest level—CareEdge-ESG 1—which is a milestone achievement in the financial services industry. This ranking makes Muthoot Microfin a leader in responsible finance and reflects its superior performance in environmental, social, and governance (ESG) factors.

This is the highest ESG rating score in the financial services industry till date, according to CARE. Not only has Muthoot Microfin surpassed the industry median score of 56.8 but also scored exceptionally well individually in all the ESG pillars. The governance score of the company is 78.9, significantly above the industry median of 64.5. This is an indicator of the openness of the company's structure, a well-balanced constituted independent board, investor hospitality, and adherence to data protection policies such as ISO 27000 certification. Ethical practice is also supported well by anti-bribery and whistleblower protection policies endorsed by the board.

Within the social pillar, 72.1 was attained by Muthoot Microfin compared with an industry average of 56.5. The organization has a 100% women borrower base, a testament to its dedicated efforts towards economic empowerment of women in rural India. It enjoys a 95% rate of grievance redressal and equal remuneration with a 1:1 male-female ratio for remuneration. The organization has been rated as a Great Place to Work for six consecutive years, a further testament to its dedication to diversity in the workplace and worker satisfaction.

Environmental performance, while relatively lower at 54.6, remains in the industry's top quartile for Muthoot Microfin. The organization has also made investments in renewable energy projects like rooftop solar installations across 50 branches and has also released INR 27.5 crore in green loans. It has also pledged to be Net Zero by 2040, which is ahead of most of its industry counterparts. It manages environmental risk through an ESG Risk Register and a Climate Risk Framework.

Muthoot Microfin's overall ESG framework consists of strong data governance with nil cases of data breach throughout FY24. The company is completely compliant with the Digital Personal Data Protection Act and has adopted strong controls of access to protect client information.

Besides ESG scores, the inclusive policies of the company can further be observed from its manpower practices. Programs like "Pink Hiring" and the "HER Initiative" are also focused on gender equality in terms of recruitment as well as career development. For enhancing workforce strength, the company offers subsidies in purchasing electric vehicles as well as accommodation allowances, thereby minimizing the attrition of staff.

CARE ESG Ratings' ESG analysis were derived from more than 1,500 climate risk, governance practice, and social impact data points. Muthoot Microfin's leadership emphasizes its business integration of sustainability, including special emphasis on ethical lending practices and proper practices. These practices align with investor expectations for ESG-aware financial institutions and long-term operational stability and growth.

Muthoot Microfin is a part of the 138+ year old business heritage of Muthoot Pappachan Group (commonly referred to as Muthoot Blue). The company's business model is centered on the provision of micro loans to rural Indian woman entrepreneurs. As of 31st December 2024, Muthoot Microfin has 3.42 million live borrowers with 1,651 branches across 20 states and 379 districts. It has a Gross Loan Portfolio (GLP) of ₹12,404.9 crore and is included in S&P BSE Financial Services Index.

With this ESG rating, Muthoot Microfin is a benchmark for sustainable community-based finance in India. The high rating indicates good internal practices as well as concern for environmental stewardship, social justice, and transparent governance—making it a model for the country's new generation of ethical financial services.

Source/Credits: Muthoot Microfin Limited, CARE ESG Ratings Limited