Nature-aligned green finance taxonomy shall enable sustainable finance flows in the country

Dec 10, 2024

NEW DELHI, 10 December 2024: FICCI, WWF-India, and Indian Banking Association (IBA) jointly organized a workshop yesterday on 'Mainstreaming Nature and Climate-related Risks for the Finance Sector'. There is growing momentum around sustainable finance in India, with the investors increasingly asking for non-financial disclosures and the regulator echoing the need for increasing the understanding of the banking sector professionals on climate and ESG impacts of financial decision making. To ensure that India’s finance sector workforce develops the ESG skills and competencies necessary to implement and achieve the objectives of India’s sustainable finance roadmap, sustainable finance education is critical to upskilling the sector at scale.

 

In her welcome address, Ms Jyoti Vij, Director General, FICCI, highlighted that India’s rapid growth depends on sustainable resource management. Integrating sustainability into financial decisions is key to mitigating climate risks and ensuring long-term economic stability. As global focus on climate change intensifies, regulators like the RBI are incorporating nature-related risks into financial frameworks. Investments in green technologies, renewable energy, and sustainable agriculture are critical for sustainability. Financial institutions must disclose climate and nature-related risks, with guidelines for financial disclosures and risk management being essential. The national green taxonomy will enable these disclosures, directing capital to sustainable projects and supporting India’s long-term growth amidst climate challenges.

 

In his theme address, Mr Ravi Singh, Secretary General & CEO, WWF-India, emphasized the critical need for sustainable management of ecosystem services, which is essential for both the economy and human well-being. The recently launched WWF Living Planet Report states a steep 73% decline in wildlife populations in just 50 years (1970-2020), indicating ecological degradation combined with climate change and nature loss.

 

The financial sector plays a pivotal role in shaping how we address these risks. As India continues to grow as one of the world’s largest economies, the intersection of environmental sustainability and financial risk must be addressed. WWF-India's report 'Integrating Nature’s Loss and its Risks within the Finance Sector: A Look at India’s Finance Landscape' provides an examination of how these risks manifest within India's context, offering insights into emerging regulatory frameworks, best practices for risk management and opportunities for innovation.

 

In his special address, Mr Gopal Murli Bhagat, Officiating Chief Executive, IBA, emphasized the responsibility to leave a better world for the next generation. He highlighted India's efforts and stressed the need to connect actions across sectors for a unified approach. The financial sector can support government initiatives, such as promoting rooftop solar systems and renewable energy, and play a key role in educating children about climate risks. With the global average temperature rising by 0.9°C since the 1970s, the financial sector, regulators, the government, NGOs, and NPOs must collaborate to raise awareness. The green economy transition is underway, and dedicated committees on climate risks are essential for driving impactful action.

 

Mr Bikash Narayan Mishra, Senior Advisor, IBA, highlighted that nature-related risk awareness is still in its early stages, while climate-related risks have gained more attention. He emphasized that learning starts at home, encouraging children to teach their parents about climate risks. This grassroots approach can foster a culture of environmental awareness and create a broader understanding of the urgency needed to address both nature and climate-related challenges.

 

The workshop focused on two key sectors within the economy: Agro-commodities Finance and Infrastructure Finance, aligning with the broader theme of integrating nature and climate-related risks into financial decision-making. It also had deliberations on the policy and financial interventions for building sustainable and deforestation-free agro-commodity supply chains, and strategies for integration of climate and nature risks in the infrastructure investment criteria and measures adopted to de-risk them. The session also saw the participants sharing best practices for sustainable financing of agro-commodities and infrastructure.