Global Sustainable Finance – policy implications for India

Abstract

Why should a developing economy like ours even be concerned about sustainable finance? As per a Mckinsey global institute report, Climate change induced catastrophes could put 4.5% of the GDP at risk, much higher than other country. As per the 2015 Paris agreement NDCs, India needs ~USD 170 Bn per annum from 2015 to 2030 for climate action, but it could only raise USD 19 Bn per annum from 2016-18. This gap gets even more appalling when we look at the climate investment potential of India. As per IFC, India has a potential of $3 Tn of climate smart investment between 2018-2030. Narrowing down this gap is important to enable growth of sustainable businesses in India. It raises important questions. What can India do to reduce this gap? What policies and protocols should India mandate? How should these policies and protocols differ based on Industry and size of business? What should businesses do to raise funding for their sustainable businesses? The report starts by providing an overview of the global sustainable finance regulatory practices, followed by a discussion on sustainability related disclosures. It then discusses about the Indian scenario outlining the evolution and challenges. It then moves on discuss about the potential fixes to these problems. It finally concludes with a discussion on key implications in terms of policy making and taxonomy development.