RBI, green finance, and the blue planet

The central bank's report seeks to nudge banks and financial institutions to catalyse risk mitigation from climate change

- RAGHU MOHAN

Last week, BNP Paribas said it will no longer bankroll new oil and gas fields, and stick to its target I of an 80 per cent cut-back in such exposures by 2030. This must be seen in the context of the "Green Deal", the flight path for the European Union (EU) to become climate-neutral by 2050; and the EU Commission's announcement of €1 trillion in investments to pay for this journey. While no similar commitment has been made by Indian authorities, the ministry of environment, forest and climate change has put the cumulative expenditure for adapting to climate change at 85.6 trillion (at 2011-12 prices) by 2030. The stakes are getting to be bigger.

The Reserve Bank of India (RBI) has aptly themed its latest Report on Currency and Finance (C&F: FY23), Towards a Greener Cleaner India. It has highlighted the impact of climate-change-induced risks to macro-financial prospects, and the need for dedicated research to draw up a range of policy options to address them. In his foreword to the report, Governor Shaktikanta Das, noted: "Such research becomes even more critical in the context of the complexity and non-linearity of the ways in which climate, economy, financial systems and related policies operate."