Green finance for sustainable and collaborative growth

Calling green finance the backbone of resilient and competitive economies, Indian Union Minister for Environment, Forest and Climate Change, Mr Bhupender Yadav, highlighted that green finance as the cornerstone for sustainable and collaborative growth.

Addressing the fourth edition of The Federation of Indian Chambers of Commerce & Industry (FICCI) LEADS on the theme “Collaborations for Growth in a Transformative World”, Mr Yadav pointed out that India will require over $10 trillion by 2070 for achieving its net zero ambitions and called for global financial systems to unlock private capital while ensuring transparency, accountability and affordability, according to an Indian Press Information Bureau (PIB) media release.

The minister emphasised that green finance is not to be seen as a niche intervention but as the backbone of competitive and resilient economies. It involves restructuring capital flows so that every investment – in infrastructure, agriculture, transport, or industry – not only yields economic returns but simultaneously strengthens sustainability. The PIB release said green financing, as Mr Yadav stressed, must form economic systems in which growth is interwoven with ecological well-being and the health of communities.

Quoting United Nations Environment Programme’s (UNEP) Executive Director Inger Andersen, Mr Yadav said, “Finance is the make-or-break issue for climate action. Without it, the 2030 Agenda and the Paris Agreement will be pipe dreams.” Highlighting India’s achievements, he added that sovereign green bonds have attracted strong investor confidence, regulators...are ensuring accountability and credibility in green instruments and blended finance mechanisms are being used to support renewable energy, electric mobility, waste-to-wealth and nature-based solutions. He added that high-integrity carbon markets, based on transparency and clear accounting, can channel billions into climate action that would otherwise not be financed and called it a key pathway to mobilise resources for mitigation while promoting technology transfer and capacity building.

The Minister laid down three core principles guiding India’s climate action efforts. First, that climate finance is indistinguishable from development finance. Second, that clean power, efficient cities, climate-smart agriculture, and resilient infrastructure are not additions but the very foundation of national security and industrial competitiveness. Third, that those countries which mobilise green investments today will dominate the future value chains of industry and trade. He observed that developed countries bear a moral responsibility to support the global South, observing that the UNFCCC process target of $300 billion by 2035 is inadequate and does not reflect the scale of the challenge.

As a World Economic Forum report explains, at its simplest, green finance is any structured financial activity – a product or service – that has been created to ensure a better environmental outcome. It includes an array of loans, debt mechanisms and investments that are used to encourage the development of green projects or minimize the impact on the climate of more regular projects. Or a combination of both. Typical projects that fall under the green finance umbrella include renewable energy and energy efficiency, pollution prevention and control, biodiversity conservation, circular economy initiatives, and sustainable use of natural resources and land.

According to a report by the Centre for Economic Transition Expertise (CETEx) of the London School of Economics, in May 2025, the Department of Economic Affairs (DEA) within India’s Ministry of Finance released a first draft framework of India’s Climate Finance Taxonomy for public consultation. The taxonomy aims to facilitate around $250 billion per year of finance towards climate-friendly technologies and activities and thereby enable India to achieve its interim 2030 and long-term 2070 net zero targets. The draft framework already integrates many positive and encouraging priorities that will ensure that the development of the Climate Finance Taxonomy follows international best practice.

A 2024 Climate Policy Initiative study had recommended that India needed to urgently scale green finance to enable low-carbon and climate-resilient development. The report had then proposed the following priorities: coordinated action to scale up green finance at a faster pace; enhancing finance for adaptation; furthering policy and regulatory measures to mobilize green finance across all sectors; making coordinated efforts across data collection, reporting, and access. Tracking flows to real economy sectors, the study considered both public and private sources of capital to track the flow of finance from the source to the end beneficiaries through different instruments.