Transition finance: Paving way to a net zero future
World Economic Forum suggests that transitioning to a nature-positive economy could generate over $10 trillion and create nearly 400 million jobs by 2030. Most importantly, it can support the public sector through blended finance - public private partnerships. It is beyond doubt that India has made good progress in its sustainability endeavours in response to climate change and other environmental hazards.
The National Clean Energy Fund, Reseve Bank of India’s maiden Sovereign Green Bond, adoption of reporting norms for Business Responsibility and Sustainability Report (BRSR), and SEBI’s expanded scope of green financing and more recently the Securities and Exchange Board of India (Credit Rating Agencies) (Amendment) Regulations, 2023, which introduce rules for ESG R\ratings providers (ERPs), are measures furthering India’s commitment to transition towards a greener world. The transition to a low-carbon economy in India faces significant challenges in terms of private sector financing. These challenges stem from various barriers, including the absence of a clear definition for transition activities, which can result in "greenwashing" practices.
Furthermore, there is a lack of disclosures regarding sustainability and environmental impact of investments. Additionally, the availability of innovative financial instruments specifically designed to support decarbonization efforts remains limited. Addressing these challenges is crucial to mobilize private sector financing for the transition to a greener economy in India.
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