Mahindra & Mahindra (M&M) has partnered with DBS Bank India to introduce an ESG-linked financing programme for its dealer network, marking a new approach to sustainability-focused lending in India’s automotive retail sector.

Under the arrangement, authorised Mahindra dealers will be eligible for loan pricing linked to predefined environmental performance indicators. The financing will be used for the purchase of passenger and commercial vehicle inventory.

The programme comes as automakers increasingly look beyond factory operations to reduce Scope 3 emissions generated across supply chains, logistics and dealership networks. Dealer operations have emerged as a focus area amid tightening ESG reporting standards and India’s broader decarbonisation push.

Sustainability metrics to determine financing benefits

According to the companies, dealerships will be assessed on parameters including greenhouse gas emissions, water consumption, renewable energy usage, rainwater harvesting, waste management systems, public EV charging infrastructure and electric SUV sales.

Dealers meeting higher sustainability benchmarks will qualify for more favourable financing terms under the structure developed jointly by Mahindra and DBS Bank India.

“The launch of this financing programme will help expand our decarbonisation efforts and bring dealerships into the broader sustainability framework,” said Nalinikanth Gollagunta, CEO, Automotive Division, Mahindra & Mahindra (M&M)

The initiative reflects a wider shift in corporate lending, where financing structures are increasingly being linked to ESG-linked operational targets rather than only balance-sheet metrics.

ESG-linked lending gathers pace across sectors

Sustainability-linked loans have gained traction across sectors such as manufacturing, energy and infrastructure over the past few years, though adoption within automotive retail networks has remained limited.

DBS Bank India said the programme was designed to support dealers transitioning towards lower-emission operations while maintaining access to working capital financing.

“The financing programme is aimed at supporting the decarbonisation of Mahindra’s dealer network by linking financing structures with sustainability-linked operational targets,” said Divyesh Dalal, Managing Director and Country Head – Global Transaction Services, Corporate Banking – Financial Institutions and SMEs, DBS Bank India. He added that the structure had been customised using the bank’s cross-border experience in sustainable finance solutions.

The development also comes against the backdrop of India tightening its climate commitments under updated Nationally Determined Contributions (NDCs) linked to the Paris Agreement and the country’s net-zero target for 2070.