BIRD'S-EYE VIEW

Green capital for small- and medium-sized enterprises (SMEs) is governed by a combination of factors—trends in sustainable finance, stringent regulatory frameworks and policy interventions

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Green financing is helping the world fight climate change and mitigate its environmental depredations, showing extraordinary resilience even through periods of global turmoil. For example, it reached $1.46trn in 2022, despite the covid-19 pandemic, rising inflation and geopolitical tensions.

Money Matters

According to preliminary analysis, finance flows surpassed $1.5trn in 2023, driven primarily by renewable energy and low-carbon transport. In 2024, the Green Climate Fund (GCF) approved $686.8mn in financing to mobilise approximately $1.5bn for 11 projects across 42 countries, benefiting 115mn people.

India needs Rs 162.5trn by 2030 to achieve its Nationally Determined Contributions (NDCs). The proposed climate finance taxonomy in the Union Budget 2024-25 is a valuable step towards guiding India’s economy towards a sustainable and low-emission future.

By setting clear definitions for green investments and aligning them with national climate goals—like the updated NDC and the upcoming Adaptation Plan—the taxonomy will be instrumental in providing much-needed clarity, enhancing investor confidence, and driving the expansion of green and climate-related investments.

Green Stewardship

Beyond traditional financial metrics, several critical factors are leveraged to assess investment risks and opportunities. Investors committed to reducing their impact on the planet and promoting sustainability are inclined towards supporting companies with a similar vision and approach.