Green finance: A foundation stone for a sustainable future of India

 Both industrialized and developing nations are dealing with a number of urgent energy and environmental concerns, such as rising energy costs, greenhouse gas emissions, global warming, unmet energy efficiency targets, and a lack of public support for the development of renewable energy sources. It is anticipated that the banking sector would be crucial in addressing these massive obstacles. It is insufficient to simply set up the legal and technological structures needed to address these problems. One of the most important obstacles to solving these problems and ensuring that everyone has equitable and sustainable growth while staying within the parameters of the planet is a lack of financial resources. The priority regions are not seeing a large-scale deployment of these solutions.

In order to meet sustainability targets, reducing our dependency on fossil fuels, the cost of power, and greenhouse gas emissions can be accomplished through energy transition and raising the proportion of renewable energy in our energy baskets. However, obtaining funding is more challenging for renewable energy projects than for others. Lack of long-term funding, the presence of numerous hazards, the lower rate of return in renewable energy projects, and insufficient market forces are the key obstacles to financing for these projects. Therefore, significant policy change in the area of financial management is necessary if we are to establish a sustainable global economy. Additionally, we must increase the financing of investments that have positive environmental effects, a practice known as "Green Finance."

India has experienced remarkable progress, albeit not without significant environmental challenges. Long-standing problems in the nation include pollution, deforestation, and climate change, all of which have a negative influence on economic growth and public health. Nonetheless, the Indian government has been implementing policies to encourage sustainable growth and lessen the nation's carbon impact in recent years. Using green money is one of the primary tactics.

Glimpse of Green Finance

Started as a movement that genuinely reflects the need that exists today to be aware of how human activity affects the planet, green financing is setting out to create platforms that are both creative and sustainable. Green fintech in India is concentrated on lowering emissions and boosting biodiversity as fintech aims to automate financial services and expedite procedures.

Green finance basically describes financial investments that are socially and environmentally conscious. The effectiveness of this kind of funding in reducing climate change and advancing sustainable development is becoming more widely acknowledged. In recent years, it has become increasingly popular in India, where the government has launched many programs to promote green investments.
The goal of green funding is to create creative and long-lasting platforms. Green fintech in India is concentrated on lowering emissions and boosting biodiversity as fintech aims to automate financial services and expedite procedures. The goal of this new breed is to use technology to promote environmental sustainability and improve the health of the earth.

Technology’s Role

The optimization of technology is leading this true fintech revolution. Indeed, only because of numerous tech-intersections like AI and Big Data has Green Finance become a significant force redefining the financial industry. Examining how these technologies are bringing in a new era for sustainable banking and finance.

First off, big data may be used to quantify how an organization's assets—including the supply chains they trace—affect the environment. The exposure of fixed income portfolios to different risk scenarios associated with the transition to a low-carbon economy and the Sustainable Development Goals (SDGs) can then be examined using this data.

Secondly, AI can assess a company's influence on the SDGs, assisting investors in making choices that align with sustainability objectives.
Furthermore, by using its forecasting, problem-solving, and prediction skills, AI can be used to fight climate change. AI-augmented satellite images, for instance, can identify vegetation, forest cover, and natural disasters, offering important insights on changes in the environment.
Finally, greater progress toward accomplishing the SDGs may be made with the use of new technologies, data sources, and analytical techniques, which will ultimately result in a more sustainable future for everybody.

Government’s Initiatives

The National Action Plan on Climate Change, which was introduced by the Indian government in 2008, was one of the most important actions done in this area. The National Solar Mission, the National Mission for Enhanced Energy Efficiency, and the Green India Mission were among the eight main missions that the plan highlighted. The goal of these missions is to advance sustainable development throughout the energy, transportation, agricultural, and forestry sectors of the economy.

The Indian government has established a number of funds and organizations to provide green funding in order to assist these aims. In order to finance renewable energy initiatives, the National renewable Energy Fund (NCEF) was founded in 2010. A percentage of the money collected by the coal tax levied on India's coal sector goes to the fund. Numerous renewable energy projects, involving biomass, wind, and solar energy, have received funding from the NCEF across the nation.
The Indian Renewable Energy Development Agency (IREDA), which was founded in 1987 with the goal of promoting and funding renewable energy projects, is another significant organization. Loans and other forms of financial support are offered by IREDA to public and private sector organizations involved in renewable energy initiatives.

 

Contribution of Private Stakeholders

In India, the private sector is contributing significantly to the promotion of green finance in addition to government measures. Green bonds are issued by a number of banks and financial institutions and are intended to fund ecologically friendly projects. Guidelines for the issuing and listing of green bonds in the nation have recently been released by the Securities and Exchange Board of India (SEBI).

Adopting green finance offers India a number of advantages. First of all, it lessens the nation's carbon footprint and encourages sustainable development. This is especially crucial for India, a nation that is predicted to rank among the top emitters of greenhouse gases in the years to come. Second, it gives investors a chance to support sustainable development and help create a more environmentally friendly future. Lastly, it can aid in lowering energy costs and enhancing national energy security.

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Conclusion

As a result, by giving environmentally sustainable initiatives the funding they need, green finance is really opening the door for India's sustainable future. The country's green finance industry is expanding as a result of government incentives, increased tech optimization, and participation from the business sector. India stands to gain from the adoption of green finance in a number of ways, including enhanced energy security, reduced carbon emissions, and promotion of sustainable development. It is anticipated that India would keep making green finance a top priority and step up efforts to create a more sustainable and environmentally friendly future.

Ms. Vaishali Sharma