TICKING THE RIGHT BOXES

The Draft Framework for Climate Finance Taxonomy can catalyse financial innovation and make India a net zero economy

- NIRUPAMA SOUNDARARAJAN & ARINDAM GOSWAMI

AS INDIA ADVANCES towards its ambitious climate goals, aligning financial flows with sustainable development objectives has become paramount. The recently released Draft Framework for Climate Finance Taxonomy is an important step to establish a unified framework to guide investments towards climate adaptation and mitigation measures. The Economic Survey 2023-24 estimated that India requires approximately $2.5 trillion for mitigation efforts by 2030. Adaptation financing estimates of $1tn by 2030 add further pressure, particularly for critical sectors such as agriculture, infrastructure and water resources.

India has made notable strides in mobilising climate finance. Sovereign Green Bonds (SGBs) have provided a credible avenue for raising funds. India’s first Carbon Credit and Trading System under the Emissions Trading Scheme in Surat incentivises low carbon emissions by trading emission permits. Last year, Sebi proposed the launch of ESG Debt Securities to help companies align financing needs with ESG targets.