A PROJECT ON

GREEN FINANCE AND SUSTAINABLE GROWTH

21107049- KESHAV MATHUR

21107012- UDIT VASHISHT
21107055- PULKIT DHIMAN
21107023- SHIKHAR SAXENA
ABSTRACT:
Three primary issues are undermining the global economy in the current era of technological
advancement: environmental change, energy shortages, and financial emergencies. This is due to
the fact that economic growth also brings costs to the countries in the form of environmental
deterioration. The answer to achieving a contract between the economy and environment is green
finance. Green financing is thought of as the financial support for green development, which
completely reduces ozone depleting substance discharges and air pollution emanations. For the
financial advancement of the country, green funds in horticulture, green constructions, green
security, and other green activities should rise. In this essay, an effort has been made to examine
the body of knowledge already in existence about green finance and its potential in India.
 1) INTRODUCTION:

In the twenty-first century, green financing has become crucial to both industry and
environmental science.It is recommended that both developed and developing countries work
towards green funding, with estimates estimating that between 2012 and 2030, global green
financing would total $40 trillion. The foundation of green credit is green finance. It alludes to a
set of administrative measures mandating that commercial banks and other financial
organizations do research and development to create pollution treatment facilities and be
involved in the conservation and restoration of the environment.

Additionally, it develops and uses new energy resources with a focus on financial, green product,
and environmental rural generation, provides credits to assist appropriate undertakings and
establishments, and actualizes concessionary low financing costs, but restricts new venture
speculations of contaminating endeavors accompanied by some guilty loan fees (Xu, 2013).

1.1. OBJECTIVE OF THE STUDY:

In a few understated ways, green funding is illustrated in this study. Green financial services and
products become a fundamental component of the relationship's ability to endure as the company
becomes more and more linked with the environment. The main goal of this study is to
strengthen green funding across the country at the local level.

1.2. METHODOLOGY:
The current analysis is mostly based on secondary research findings on global green funding. We
have made an attempt through our work on green financing initiatives in underdeveloped
countries such as India. Every general public requires a green fund for eco-friendly businesses.
The world's population is rapidly growing, and we need a green fund to ensure that the earth
remains a safe haven for all sorts of organisms.

1.2.1 RESEARCH DESIGN

PRIMARY DATA

https://forms.gle/vGY1sLPS1T23qFie9

Sample Size- 30
Sample Population- Majorly Youngsters of age 18-25 majorly of Tricity (Chandigarh,
Panchkula, Mohali). Still, respondents of other age groups are also considered.
Sampling Technique-Convenience Sampling, In the graph, we have represented the number
of people aware of Green Finance. 34.5% people were aware of the concept of Green
Finance.The prime focus was on people's perception of Green Finance and their opinions
on how green financial products or services can be used to promote environmental
sustainability.The aim was also to know what initiatives and policies they think can be
taken by the financial institutions to bring about greater investment in green financial goods
and services.

SECONDARY DATA

Secondary data was collected from the online available sources listed in the bibliography.

LIMITATIONS OF THE STUDY:

PRIMARY DATA LIMITATIONS

 ● The forms filled out by the known writers involved, who primarily fall into the age
range of 18 to 24, are the only ones used to collect data using Google Forms, which
limits its ability to accurately reflect the overall population.
● Primary Data collected from a particular age group may differ with the opinions of
the others and their thoughts may vary.

SECONDARY DATA LIMITATIONS

● Due to the scarcity of platforms that offer these resources, restricted access to
academic publications and research articles was a restricting issue.
● As this topic recently came into concern for different nations, they have only made
up documented plans, but not be able to take physical steps forwards. So not much
data is available on the internet, except discussions and debates.
● Another limitation of secondary data is that we didn’t knew how the data collection
process was done and how well it was done.

2) DATA ANALYSIS AND INTERPRETATION:

 As we can see that the major proportion(63.3%) of the people that filled the form didn’t
knew about the term green finance , revealing that not many people are aware of the term.

In this question, we can see that most of the people(66.7%) didn’t invested in the green
financial products or services and most of the people don’t even know about the definition of the
green finance and green products.
 As we can see from above pie chart that even people are not aware of this term but they
still think that it's important to promote environmental sustainability
 Most of the companies or organizations prevent people from using financial products due
to lack of awareness and high cost according to the majority of people. The normal people or NPC
don’t even bother to know about these products, projects and the importance that it will have in the
later generations.

According to most people, renewable energy financing is more suitable for environmental
sustainability than green bonds and green mutual funds, it is also useful but we can’t compare all
the 4 options, but renewable energy financing should be our priority as most of these resources are
going to replenish in future.
 As we can see, usage of green financial products will majorly depend on how much more
expensive they are in comparison to other traditional products . 73.3% of people’s decision will
depend on how much more expensive the product is . 23.35% people are willing to invest in green
financial products despite the high price.

As we can see, the government should focus on spreading awareness on this particular topic
and provide some incentives in the beginning so that more people get attracted to this concept.
 Financial institutions should also provide insight on this topic as many people are unaware
about the impact on environment based on their investment decision

Financial institutions should give education about how to use finance as a tool for the
benefits of green finance.
 According to the answers Financial products should be chosen based on interest rates and
returns and the need for the present situations.

Result of this study is that either the gonernment is not making enough efforts on promoting
green finance or that the people are not very much interseted in it as they are not really aware
 This data shows that major propotion(73.3%)of the people are not aware with risks and
benefits involved with green financial products or services and only few are aware of this topic.

As we can assume, most of the people think that this topic will help combat climate change.
 If the financial return on return by investing in green financial products or services were to
be maid clear than many more people would be likely to invest in green financial products.

The government is the major stakeholder for promoting and launching different policies
regarding green financing.

3) LITERATURE REVIEW
Heim and Zenklusen (2005) discovered that stock market investors have grown environmentally
conscious and would not favour industries that do not meet pollution standards. Wagner and
Schaltegger (2006) highlight the unsolved issue of the requirement for generally recognised
accounting and reporting standards with indications relevant to any sector. Another point was
made that social and environmental reporting and accounting should be created and implemented
together. Scholz, Weber, and Fenchel (2008) According to a survey of UNEP and non-UNEP
banks, environmental risk analysis was incorporated only during loan application due diligence
but not in other areas of the loan's life, notably the monitoring phase. They claim that the banks
do not fully appreciate the implications of environmental hazards on their lending portfolio.
According to Verma et al. (2012), there are various difficulties that are impeding the growth of
green financial products.

Green products have yet to establish themselves as an economically viable choice, owing to the
market's abundance of lower-cost alternatives. Unlike what is happening in Europe, where the
market for green financial products and services is expanding rapidly, the global market is still in
its early stages, with no clear boundaries and no unified characteristics that distinguish it from
traditional industries.
Financial institutions, particularly banks, have an important role to play in contributing to the
development of a strong and successful low-carbon economy; they should expand the use of
environmental information in credit extension and investment decisions. The initiative will
assist them in proactively improving their environmental performance while also providing
long-term value for their organization. enterprises having a bigger carbon footprint may be
perceived as riskier in the future, and banks may avoid funding such enterprises in favor of
investing in new technological solutions that absorb or decrease carbon emissions. According to
Höhne et al. (2012), "green finance" refers to "financial investments flowing into sustainable
development projects and initiatives, environmental products, and policies that encourage the
development of a more sustainable economy."
These financial expenditures also include reductions in greenhouse gas emissions (GHGs),
industrial pollution management, and biodiversity conservation. Similarly,
PricewaterhouseCoopers Consultants (PWC 2013) defines green finance as "financial products
and services provided to promote environmentally responsible investments and stimulate
low-carbon technologies, projects, industries, and businesses while taking environmental factors
into account throughout the disposal decision making, ex-post monitoring, and risk management
processes." Lindenberg (2014) defines green finance as: 1) financing of green investments in
environmental products and services, as well as the prevention of environmental and climate
damage; 2) financing of public green policies that encourage the implementation of
environmental projects and initiatives; and 3) a green financial system that focuses on green
investments.

Jha and Bhome (2013) collected primary data from 12 bank managers, 50 bank workers, and 50
general customers to perform an empirical study on efforts taken to become green in order to
assess the understanding of bank employees, associates, and the general public on green
banking concerns. The researchers discovered that the most extensively used banking tactics
were online banking, green loans, energy-saving equipment, green credit cards, usage of solar
and wind energy, and mobile banking. Khandelwal and the healthy environment, green banking
in rural branches, green credit cards, and green loans are all examples of initiatives. Goel
(2016) stated that India has a huge potential to construct the green infrastructure required for
green finance by eliminating hurdles and raising awareness among corporate citizens. In his
article, Goel (2013) highlighted the concept and benefits given by "green banks." He also
investigated the green banking practices of ICICI Bank, IDBI Bank, HDFC Bank, SBI, and Yes
Bank. It also recommended green banking techniques such as internet banking, waste
management, a clean and sanitary atmosphere, green banking in rural branches, green credit
cards, and green loans. Goel (2016) observed that India has a huge potential to construct the
green infrastructure required for green financing by removing impediments and raising
corporate citizen consciousness. According to IFC (2016), a lot of work has been done by many
players to get traction in terms of rewarding and monitoring green financing. It demonstrates
that green funding flows through private financial institutions may be roughly estimated.
However, it also highlights the need for additional work to make green finance more
accountable and visible. The bond market has the most advanced definitions and tracking,
which might serve as a model for other markets. Existing loan tracking mechanisms in banks
should be strengthened, while institutional investors must build clear decision-making
techniques to go from awareness to action. Only a greater knowledge of the current state of
green finance will allow for a complete comparison to policy aims, as well as ramifications for
multinational organisations, national governments and regulators, the private financial sector,
and data suppliers and standard setters. China serves as an example of a rule requiring banks to
publish green loan statistics on a regular basis. China serves as an example of a rule requiring
banks to publish green loan statistics on a regular basis. Other nations adopting such rules
should draw on lessons learned from China's policy execution as well as any insights gleaned
from data collection. The stages that follow define particular action items for each stakeholder
group to improve future monitoring and therefore shaping of green finance by exploiting
existing sources of green finance information. Wang and Zhi (2016) conclude in their Beijing
study that green finance is an innovative financial pattern aiming at environmental conservation
and the achievement of sustainable resource utilization. Green finance can guide the flow of
funds and accomplish effective risk management and optimal allocation of environmental and
social resources if the market mechanism of green finance is logical. They also believe that
efficient policy regulation will avoid the knowledge asymmetry issue and eliminate moral
hazard.
According to extant green finance literature, the majority of green
investment is financed by banks. By adding environmental issues into their decision-making,
banks may more effectively control the risks associated with lending to polluting industries,
thus improving the financial system's resilience. It is apparent that the Indian banking industry
would be critical in channeling the necessary capital to finance the green revolution. However,
based on existing studies, green finance is almost non-existent in India, and there is very little
empirical evidence to explain this underperformance beyond theoretical considerations.
Furthermore, there is only a limited understanding of the concept of green finance, green
finance products, and their mechanisms.
 4) CONCEPT OF GREEN FINANCE:

There is no universal definition of green funding. Green financing is defined as financial aid for
green development that significantly reduces ozone depleting chemicals (GHGs) and air toxic
emissions. Green development is defined as development that occurs as a result of cooperation
between the economy and the environment. Green finance is investing in current and financial
advancements that reduce ozone-harming chemical emissions and other ecological
contaminations. Green development is the solution to three contemporary threats to the global
economy: environmental change, energy imperatives, and financial crises. Green finance
represents a far-reaching challenge to the traditional structures of budgetary legislation in each
nation.
Natural considerations began to play a larger role in the sphere of
venture funds in the 1990s, influencing and molding the hierarchical schedules depicting
loaning options. Green money addresses the alteration of natural corruption zones, such as air
pollution, water contamination and scarcity, stream encroachment, uncalled for transfer of
mechanical, medicinal, and family waste, deforestation, and loss of open space and biodiversity.
It must be environmentally friendly and contribute to poverty alleviation. It is a critical
approach to integrate the monetary component of the transition to low-carbon and asset-efficient
economies, as well as to adapt to environmental change. 2006 (Chaudhary and Bhattacharya).
"Green finance is a broad term that refers to money invested in viable advancement endeavors
and activities, natural items, and arrangements that enable the development of a more
manageable economy." Green finance includes, but is not limited to, the environment fund. It
also alluded to a broader range of "other natural goals, such as modern contamination control,
water sanitation, or biodiversity insurance." Moderation and adjustment back are particularly
identified with environmental change related exercises: alleviation, monetary streams allude to
investments in ventures and projects that contribute to lessening or avoiding ozone depleting
substance outflows (GHGs), while adjustment, monetary streams allude to speculations that
contribute to lessening the vulnerability of goods and people to the impacts of environmental
change (Höhne et al. 2012)".
 5) HISTORICAL BACKGROUND OF GREEN FINANCE:

The United Nations Environment Programme Finance Initiative (UNEP FI) was established in
1992 when UNEP teamed up with a number of commercial banks to raise environmental
awareness in the banking industry. The UNEP Finance programme is a one-of-a-kind
collaboration between UNEP and the economic area. It is the original concept of Green Finance.
Later on, the project continues to engage more financial organizations, such as investment and
commercial banks, insurers, and fund managers, in close conversations about linking
environmental conservation with long-term economic development. It seeks to incorporate
environmental concerns into current financial services and practices. Currently, over 190
financial institutions from more than 40 countries have signed the UNEP FI statement.
Signatory institutions to the UNEP FI statement can also learn from the network about the
current trends and practises for seizing green possibilities for growth and shaping a sustainable
finance agenda in their own development (UNEP FI, 2010, 2011).

6) THE EQUATOR PRINCIPLES:

The Equator Principles (EPs) were launched in 2003 and were first accepted by certain leading
global institutions, including Citigroup Inc., The Royal Bank of Scotland, and Westpac Banking
Corporation. It serves as "an arrangement of deliberate gauges for deciding, evaluating, and
managing social and ecological risk in venture financing" (Chaudhary and Bhattacharya 2006).
The EPs is built on the social and natural manageability of the International Financial Initiatives
(IFC) and World Bank Group's Environmental, Health, and Safety general rules, and it provides
a common benchmark and system for venture back the receiving substances, known as Equator
Principles Financial Institutions (EPFIs), make their own particular social and ecological
strategies, methodology, and models for their financing. Meanwhile, EPFIs have obligations to
ensure that borrowers understand the substance of standards and to advise them on the best way
to incorporate standards into planned undertakings. They also ask their clients to indicate their
plan to comply with EPs' requirements if they intend to continue seeking finance for the project.
These concepts may be used to any new project with total capital expenses equal to or more
than US$10 million, anywhere in the world. So far, nearly 70 monetary institutions on a global
scale have adopted and implemented the EPs. Unlike the UNEP FI report, the EPs clearly
specifies sector standards that assist EPFIs to operate autonomously and administer policies on
their own. Nonetheless, the EPs only apply to project finance and incidental advisory services, a
comparatively small market within the financial sector.

6.1 UN GLOBAL COMPACT:

The UN Global Compact (UNGC) has 10 optional principles. The signatory banks agree not to
violate human rights, to follow labour standards, to fight corruption, and to safeguard the
environment. Concerning its focus sector, the UNGC (2011) states that "businesses should
support a prudent approach to dealing with ecological difficulties; attempt activities to advance
more prominent natural duty; and empower the advancement and dissemination of earth
well-disposed advances."

6.2 CARBON DISCLOSURE PROJECT:

The Carbon Disclosure Project (CDP) is a non-profit organization that encourages firms,
investors, and other organizations to publish their greenhouse gas (GHG) emissions and analyze
their possible exposure to climate change-related risks. It informs people about their climate
impacts by utilizing a climate change reporting system. For a bank, the project may precisely
assess how much of a company's GHG emission is due to its funding.
However, the CDP has no standards or exclusion criteria in place to limit the direct effects of
bank lending to companies that do not disclose their carbon emissions (CDP, 2011; Gelder et al.,
2010). Each of these projects has been signed by a group of banks from across the world, which
greatly improves banks' sustainability and increases their environmental risk management.
 6.3 HOW GREEN FINANCE WORKS:

Green firms and innovations are all at varying stages of development, and need varied amounts
of support from diverse sources of money. There are generally three sources: domestic open
fund, global open fund, and private part fund. Residential open back refers to instant
subsidization by a legislature, whilst global open fund refers to subsidization from universal
associations and international advancement banks; private sector fund includes both local and
global financing sources. Green money may be packaged in numerous ways using various
speculative structures.

Green funds are an important component of low-carbon green development because they
connect the financial industry, ecological transformation, and monetary development (Figure 1):
"'Green back' is a missing link between 'knowing' and 'doing' in the transition to green industry."
All green modern suggestions are expensive, and numerous green industry plans of action are
frequently untested or eccentric. As a result, traditional funds may believe that backing these
green current proposals is difficult or fiscally unpalatable."(Gao, 2009).

6.4 MOMENTUM FOR SUSTAINABLE FINANCE:

Green funds are classified into three types: green framework, financial assistance for industry or
enterprises, and budgetary markets. Green funding for environmental change includes both
relief and adjustment endeavors. Many private financial experts see the risks of
environmentally friendly activities as being unjustified by the standard returns. Open financing
components, for example, issuing sensitive advances or insuring credits from private banks,
might shift this balance for apparent gainfulness. Open subsidization can encourage private
speculation. Participated in the United Nations Economic and Social Commission for Asia and
the Pacific's Financing an Inclusive and Green Future: A Supportive Framework (Hee, 2010). A
variety of deliberate and authoritative actions have highlighted prominent strands of the
supportability fundamental in India, particularly those associated with monetary marketplaces
and the saving money framework. In 2007, the RBI released its first round on managing an
account and sustainable development, allowing for the adoption of best practices and more
transparency. From that moment forward, critical steps have been made, as detailed below.
Regardless of the many dynamic methods, corporate social responsibility (CSR) has been
explicitly provided by the Companies Act of 2013 with effect from 1 April 2014 (Table 2).
All organizations, private or public, with a total asset of INR5 billion (US$81.8 million), a
turnover of INR10 billion (US$163.7 million), or a net profit of INR50 million (US$0.8
million) must spend no less than two for every penny of their normal net profit of the preceding
three fiscal years on CSR exercises. Surprisingly, sustainability-related finance is a viable
option for businesses (FICCI, April, 2016).

6.5 GREEN FINANCE IN INDIA:

India has always embraced sustainable development into its commercial practices. Vedanta
holds that while business is legitimate and an important part of society, its primary goal should
be to generate wealth for the people via ethical business practices. The Vedic text 'Sarva loka
hitam' relates to 'prosperity of lovers'. This suggests that all commercial operations must be
conducted within a morally sound and socially responsible framework. More recently, as was
the case with other developing economies, the globalization and privatization era of the 1990s
witnessed increased capital speculative activity along with resource creation through new
commercially viable activities, the creation of more goods and enterprises, and an expansion of
market reach from local to provincial to national and even global levels. Another major concern
was the possible adverse impact of more widespread industrialization on the environment.
However, with the signing of the Kyoto Protocol, environmental change concerns
received wider recognition and acknowledgment. India supported the convention in August
2002, demonstrating its feeling of responsibility in the battle against an increase in Earth's
temperature. A mechanism has been put up to engage multiple partners since Sustainable
Advancement Objectives demand enormous capital commitments that cannot be made by
Governments and public sector organizations alone. The Companies Act, 2013, a component of
the legal system, mandates that larger organizations donate at least 2% of their regular net
profits annually to Corporate Social Responsibility (CSR) activities, which include, among
other things, the following:
1) promoting preventive health care, improving sanitation, and influencing the availability of
clean drinking water.
2) ensuring biological adaptation, diverse plant protection, animal welfare, agroforestry, the
preservation of distinctive assets, and maintaining the health of the land, air, and water.
3) contributions or resources given to innovation incubators housed inside academic
institutions; and
4) Rural improvement ventures

6.6 GREEN FINANCE PRODUCTS AND SERVICES:

6.6.1 GREEN BOND
The main difference between a green bond and a conventional coupon bond is that the
issuer of the green bond uses the bond's profits to fund energy-efficient initiatives related to
renewable energy, production reduction, reforestation, etc.
In February 2014, the Indian Renewable Energy Development Agency (IRDA) released
a Rs. 1,000 per bond tax-free green bond. It issued bonds having maturities of ten years, fifteen
years, and twenty years, with interest rates of 8.16%, 8.55%, and 8.55% p.a., respectively. The
AAA grade was given by CARE and Brick Works. In February 2015, Yes Bank issued a 10-year
Green Infrastructure Bond, generating Rs. 1,000 crores. The money produced by the bank
would be used to finance green infrastructure projects including solar electricity, biomass
energy, wind energy, and minor hydroelectric projects. It has partnered with KPMG India to
yearly offer assurance services in line with the green bond guidelines. Another green bond from
Yes Bank was issued in 2016 for INR 3.15 billion as a private assignment with International
Finance Corporation (IFC) as the sole investor. ICRA and CARE have assigned the bond an
AA+ rating. In March 2015, the EXIM Bank of India issued a $500 million green bond with a
five-year maturity. It is the country's first green bond issued in US dollars.

6.6.2 GREEN INSURANCE:

Green insurance programmes are those that offer risk coverage at a reasonable cost and
increased coverage for eco-friendly products to lessen the effects of climate change and promote
ethical business practices. Currently, HSBC and Allianz are working together in India to offer
their customers green reinvestment insurance. Buildings receiving certification from global
environmental standards as the US Leadership in Energy and Environmental Design (LEED)
and the Building Research Establishment Environmental Assessment Methodology (BREEAM)
are protected by it. With only a slight increase in price, this coverage offers an extra 5% on top
of the typical covered loss amount. This would stimulate the construction industry to produce
more energy-efficient structures.

6.6.3 GREEN LOAN SCHEMES:

Green credit programmes are financing options made available by commercial banks
and other financial institutions at reduced interest rates in an effort to encourage investment in
energy-efficient projects. To encourage customers to choose green housing, i.e., buildings that
are certified by rating agencies such as Leadership in Energy & Environmental Design (LEED)
India, India Green Building Council (IGBC), and TERI - GRIHA from TERI- BCSD India,
State Bank of India (SBI) launched a Green Home Bank loan scheme at low interest rates. The
Civic Hybrid from Honda, the Tata Indica CNG, the Reva electric vehicles, the Mahindra Logan
CNG versions, the Maruti LPG versions of the Maruti 800, Omni, and Versa, and the Hyundai
Santro Eco are just a few examples of the vehicles that will benefit from the vehicle finance
programme that ICICI Bank has introduced. The bank tries to lower the processing costs for
consumers buying houses in LEED-certified structures through its home finance programmes.
(2015) Raghupati and Sujhatha The Union Bank of India provides loans to farmers through
programmes for the installation of solar house lighting systems, solar water pumps, and solar
water heaters. The Saur Urja Yojna programme of the Punjab National Bank helps small
farmers fund the acquisition of solar-powered lights and water heaters for their homes. Other
medium-term loan programmes are available to farmers for the construction of greenhouses and
the establishment of biogas plants with hygienic latrines. India, a developing nation, currently
has a burgeoning bond market.

6.6.4 FUTURE SCOPE OF GREEN FINANCE IN INDIA:

The potential for investment in green projects utilizing renewable energy resources has
expanded as a result of environmental sustainability becoming a major concern on a global
scale. As a result, many banks and financial institutions would welcome the opportunity to
participate in this expanding industry. As a result, demand for structured green funds and green
bonds will rise. Additionally, buying such bonds would give investors the benefit of
diversification. This is true in the context of India as well, according to a study by McKinsey &
Co., which found that investing in energy efficient technologies in building infrastructure could
reduce India's projected increase in carbon emissions to 5 to 6.5 million MT by 30% to 50% by
2030. However, even after taking into account the sharp decline in cost of renewable energy
technologies, this would require an additional 600 to 750 billion Euros. IFC, the International
Finance Corporation, has already made a move in this direction. It has chosen to allocate $75
million for 2015 investments in green bonds issued by Punjab National Bank Housing Finance
Ltd. These are secured non-convertible bonds, and the money raised will be used to build green
homes that have been EDGE-certified by the World Bank.
In India, a Council on Climate Change overseen by the Prime Minister was established
in 2007 and reconvened in 2014 to address climate change adaptation and mitigation. The
National Action Plan on Climate Change, JawaharLal Nehru National Solar Mission, National
Water Mission, National Mission for Enhanced Energy Efficiency, National Mission on
Strategic Knowledge for Climate Change, and National Clean Energy Fund are just a few of the
initiatives it has started.Other initiatives include the Auto Fuel Vision and Policy 2025, Low
Carbon Strategies Expert Groups, etc. NABARD has been recognised as a National
Implementing Entity (NIE) by the Green Climate Fund, which was established within the
framework of the United Nations Framework Convention on Climate Change (UNFCCC), to
support renewable energy projects in India.

6.6.5 RECENT GOVERNMENT POLICIES AND INCENTIVES

OF GREEN FINANCE IN INDIA:
The following are recent government initiatives and policies that have broadened the use of
green financial products in India:
According to India's National Action Plan on Climate Change, the nation should produce
10% of its electricity from renewable sources by 2015 and 15% by 2020. Renewable energy
accounts for 12.42% or 31,692.14 MW of India's installed power generation capacity, which
is 2, 55,012.79 MW, demonstrating the vast potential for investment in this industry.
The Ministry of New and Renewable Energy (MNRE) has updated its objectives for energy
capacity to 1,75,000 MW until 2022, consisting of 1.00.000 MW solar, 6.00.000 MW wind,
ten thousand MW biomass, and five thousand MW small hydro. These updated goals
necessitate a large expenditure. The Indian Renewable Energy Development Agency
(IREDA), Rural Electrification Corporation, and Power Finance Corporation have all been
requested by MNRE because the funding that has been approved would not be sufficient.
To raise money, IFCI Ltd., SBI Capital Markets Ltd., and ICICI Bank Ltd.
To support attempts to promote a clean environment, the finance ministry has increased the
clean energy cess on coal by Rs. 100 per metric tonne. The National Clean Energy Fund's
(NCEF) mission has been broadened to include funding clean environment activities,
promoting such initiatives, and funding research in that direction.
The utilization of renewable energy sources in the railway industry has also been suggested
by the government. It involves the use of compressed natural gas (CNG) in train operations,
the construction of water recycling facilities, and the use of solar energy to illuminate
coaches, station structures, and platforms. Additionally, it is suggested that the locomotive
cabin's design be altered to lower the noise level.
 Other government initiatives include its plans to establish a solar army, provide venture
capital to ambitious solar power generation projects, and establish solar parks with a
combined capacity of 20,000 MW over the course of five years.
The new MNRE effort, Indian Innovation Lab, intends to unite public and commercial
leaders on a shared platform to create cutting-edge instruments that will reduce risks and
focus more funding towards green growth in India. Loans for SME, Rooftop Solar Private
Sector Financing Facility, P 50 Risk Solutions, and Renewable Energy Integrated Hedging,
Equity and Debt Fund are four of the company's successful initiatives.

7) GREEN FINANCE RESEARCH AROUND THE WORLD

This section examines a few global events, observations, claims, and research findings on green
funding.
7.1 EUROPE
Reports on policy represent the majority of studies on green financing in Europe.
There are not many scholarly investigations.
According to a 2017 study by the European Commission, "green lending" by banks engaged in
green loan origination, "green equity investment," and "green bonds" that are issued in
accordance with green bond standards are the typical green financing options used in Europe.
Breitenfellner et al. (2020) conduct an analysis of the green financing industry in
Austria. Between 2021 and 2030, they project that yearly investments in Austria's green
economy would increase to an estimated EUR 17 billion. They contend that private cash should
be raised to finance sustainable (or green) initiatives since governmental funding alone will not
be adequate. They go on to claim that green financing will be a significant advance in
accomplishing this objective. They recognise that the Austrian financial system has certain flaws.
According to their claims, the Austrian market for sustainable finance products is undeveloped
by global standards, mutual funds dominate it, and institutional investors—not private
investors—drive it. They also mention how little buyers in Austria are aware of sustainable
financial options.
 In their study of Italian biomass producers, Falcone and Sica (2019) note that even if
green finance options are available, biomass producers nevertheless encounter institutional and
financial challenges when trying to fund their investment initiatives. Uncertainty regarding
government policies, a lack of financial providers in the biomass industry, the short-term focus of
green financial instruments, and a lack of understanding of available financing choices are a few
of the challenges that biomass producers face.
According to CBI (2019), many companies and financial institutions in the UK are
embracing the opportunities that come with green finance. Due to a lack of information,
understanding, access to clear data, and insufficient policy, other firms and financial institutions
have not adopted green financing. According to CBI (2019), the UK finance sector should be
prodded to transition to green financing. The CBI (2019) also suggests that current financial
regulations be reevaluated to determine where incentives might be used to promote green
financing.
According to a research by New Pathways (2020) on green finance in the
Netherlands, investors can put money into initiatives that qualify as green, such as renewable
energy, wildlife protection, and organic farms. The bulk of the money should be allocated to
qualified green initiatives at least 70% of the time (New Pathways, 2020). 6,066 initiatives were
funded between 2000 and 2009 with more than €7.3 billion from a quarter of a million private
investors (New Pathways, 2020).
Damianova et al.'s (2018) research demonstrates that for financial institutions and
private investors to participate in green finance, Russian authorities must create the proper
circumstances and incentives. They noted a few obstacles to the growth of green financing in
Russia. The difficulties include the following: (i) the lack of a leading public sector organization
to guide all pertinent players towards green funding; Due to low carbon reduction targets,
underdeveloped green procurement, lax enforcement of current environmental regulations, and
sector-level targets, there is (ii) a dearth of green projects in the pipeline; (iii) a lack of a
regulatory framework for green finance instruments; and (iv) a lack of knowledge about the risks
and return opportunities associated with green finance. Damianova et al. (2018) offer the
following suggestions to address the difficulties in developing green finance in Russia: (i)
revisiting climate change commitments and evaluating the financing requirements of the green
sector (such as green buildings, clean transport, renewable energy, waste management,
sustainable agriculture, etc.); (ii) choosing a national green finance champion and creating a
coordination body made up of the key stakeholders;(iv) investigating the potential effects of
climate change and the low-carbon transition on macroeconomic and financial stability; (v)
incorporating a green agenda into the mandates of public policy institutions and public
procurement; and (vi) raising awareness of green finance and developing capacity at all levels.
According to research by Sokolova et al. (2019), the Ukrainian government has not
demonstrated a strong interest in the green economy. Due to this, non-governmental
organizations (NGOs) rather than the government itself have a greater direct impact on Ukraine's
efforts to create a green economy. Even though the establishment of the Ukrainian Green Bank,
or "Ukrgasbank," was not a government-led initiative, it has improved the prospects for green
financing in Ukraine.
Chuah (2020) critically examines an EU green shipping finance facility and argues
that, no matter how green, a finance facility will always be subject to contractual restrictions,
governmental restraints, and financial prudential limits, which brings the value of "green
finance" into doubt.

7.2 ASIA
There have been noteworthy advancements in green financing in Asia. According to
Tolliver et al. (2021), more green financing has been provided throughout Asia to satisfy the
region's increasing desire for sustainable economic growth. Green bond issuance has increased
significantly in nations like Japan, China, and South Korea. Since 2015, China has led the world
in the issuance of green bonds, while Japan and South Korea continue to see an increase in the
issuance of green bonds by major financial institutions and development banks. Escalante et al.
2020) discovered a lack of variety in China's green bond market participation. HKGFA (2020)
covers some of the growth of green finance in several Asian regions in Hong Kong. A
cross-agency steering committee has reportedly been formed to assist the government's climate
plans and speed up the growth of green and sustainable finance, according to HKGFA (2020). A
self-assessment methodology is also available to allow for the measuring of the "greenness
baseline" of certain authorized institutions. The Hong Kong securities market has a sizable
database platform devoted to informing investors about sustainable (and green) investing
opportunities. Meanwhile, HKGFA (2020) notes that there is financial cooperation between
Shanghai and Singapore as well as virtual events on the Chinese green bond market.
Volz (2018) agrees that there are several barriers to green investment in Asia. They
include: challenging investment conditions; unfavorable regulatory and legal environments;
inconsistent policies; onerous permissions procedures; a lack of awareness of environmental and
climate risks; a lack of training for staff members who must evaluate environmental and climate
risk in the financial sector; Lack of qualified personnel, bankable and investable projects,
environmental risk assessments that are not required, and environmental, social, and governance
(ESG) disclosure requirements. Volz (2018) makes several recommendations for improving
green financing in Asia. To name a few, they are increasing public awareness of environmental
and climate risks in the financial sector, enhancing transparency through ESG disclosure
requirements, creating incentives for the financing of green projects, and building capacity in the
finance sector for environmental risk analysis and management through knowledge creation and
knowledge sharing. Establishing long-term local currency refinancing sources for banks to
enable them to issue long-term credit; supporting the creation of new market sectors, such as the
green bond market or climate risk insurance.
According to Jena and Dhruba (2020), there is an increasing need to educate India's
banking industry on the value and advantages of green financing. In addition, they contend that a
concerted, market-driven cooperative effort is required, beginning with a clear definition of
green finance, to speed up the flow of green money into India. Making rules to encourage green
finance and enacting penalties for investments with high carbon footprints are other attempts.
Chang (2019) lists various obstacles to developing green financing in Singapore as
well as potential solutions. These are a few of the issues that have been identified: Due to their
size and inability to take on projects that can be funded by green bonds, Singapore's small and
medium-sized firms (SMEs) (i) lack access to the process of issuing green bonds; (ii) lack
understanding of green finance by SMEs; The domestic green bond market in Singapore is
limited, and the two biggest market risks are transparency and reporting. Chang (2019) offers the
following fixes, which consist of (i) defining what is meant by "green," (ii) disclosing more data
on bond issuers' ESG performance; (iii) Increasing the transparency of the quality of financial
instruments for green investments, (iv) Creating demand for green investments by establishing
"green pockets," (v) Building and sharing knowledge and capacity, (vi) Jump-starting green
finance markets and investment, and (vii) Defining the value of green.

7.3 AFRICA
In Africa, there are hardly any studies on green finance. South Africa is the only
nation in Africa with an official national strategy for green financing, according to policy circles.
Nigeria issued its first sovereign green bond in December 2017, making it the fourth country in
the world overall and the first in Africa. The Least Developed Countries Fund and the Clean
Technology Fund, both run by the World Bank, were the next largest cumulative multilateral
climate funds working in Sub-Saharan Africa in 2019 (Watson and Schalatek, 2019).
Nigeria and Morocco have created national plans for long-term green funding in the
African continent. The Johannesburg Stock Exchange in South Africa established a special green
section of the stock market. The capital market regulator and the Nairobi Securities Exchange
collaborated to create green bonds rules in Kenya. The issuing of blue and green bonds has been
announced for Seychelles and Namibia, respectively. In order to introduce green bonds,
Mauritius and Gabon have created national roadmaps. The green capital market in Central Africa
has begun to take shape.
Green financing (SGF) flows with southern origins are increasing in South Africa,
according to Zadek and Flynn (2013). This is so that financial institutions may invest in
longer-term green initiatives thanks to South Africa's sophisticated financial markets. The first
Green Bond in South Africa was issued in 2012 by Nedbank. South Africa's Industrial
Development Corporation issued the bond.
All people can invest in the green bond, which has a set period and pays interest at a
fixed rate of up to 7.5% for the length of the investment. Every dollar invested in the green bond
is reserved for renewable energy initiatives that advance South Africa's green economy.
In order to help the African continent transition to a green economy, UNEP (2015)
offers a few policy ideas. The issuing of green bonds, the inclusion of green securities and green
equities on African stock exchanges, and the supply of green and inclusive credit rules and
incentives are a few of them. According to Dia (2019), several African nations have started
experimenting with innovative finance, such as Uganda's use of crowd fundraising for clean
energy and Nigeria's use of green bond financing. In his investigation of the green bond market
in Africa, Marbuah (2020), provides evidence of the sector's moderate expansion. A limited
handful of governments control the majority of the market, issuing less than 1% of the total
volume issued globally. Multilateral development organizations have issued the most green
bonds in Africa.
According to LSEG (2020), African governments will need to change public policy
in support of a greener and more climate-resilient economy. African nations will also need to
consider reducing their exposure to the fossil fuel sector. Through the development of policies
that increase the appeal of owning green assets, government involvement will be essential in the
development of the African green finance markets.
Overall, effective communication between public and private actors, international
collaboration and capacity building, active underlying securities markets, improved disclosure
and capital market incentives, and the provision of strong guidance on what is 'green' are success
factors that are crucial for developing the green finance market in Africa. The agreed definition
of 'green' also needs to be consistent with international guidelines.

7.4 NORTH AND SOUTH AMERICA

According to CBI (2017), the expansion of the green bond market in Brazil and
Mexico has boosted interregional commerce. According to UNEP (2019), between 2017 and
2018, Argentina issued three green bond deals: two from subnational entities and one from a
financial institution. The growth of the green bond market in Latin America and the Caribbean is
documented by ECLAC (2017). According to the ECLAC (2017) study, the area issued bonds
totaling US$ 8.4 billion in local and global markets between 2014 and 2017 (as of August 31,
2017). The majority of the $7.1 billion in green-focused bonds issued in the area were sold on
overseas markets. Only 1.6% of all bonds issued by Latin America and the Caribbean during that
time period were green bonds, on average, on international bond markets. 3.7% of the region's
total international debt issuance in the first half of 2017 was made up of green bonds (ECLAC,
2017).
 Similar to this, Ketterer et al. (2019) demonstrate the necessity of assuring that
regional "green" terminology and standards are in accordance with generally recognised best
practises to prevent misunderstandings and reputational risk in the Latin and Caribbean area.
They advocate for additional information to be made available to help foreign investors better
understand the performance of the Latin American and Caribbean green bond market and the
performance of the overall bond market. According to Lovells (2019), the first Mexican green
bond was issued in 2015 to finance projects for the production of wind energy in Mexico. The
government of Mexico City launched a municipal green bond to finance climate-resilient
infrastructure in 2016, making it the first local government in Latin America to do so. The
second local green bond, worth US$80 million, was issued in 2017 to fund the building of
terminals and the road corridor for Metrobus Line 7. The third local green bond in Mexico City
was issued in 2018 for US$57 million for 27 projects involving energy efficiency, Metrobus
upkeep, and improvements to the city's drinking water and sewage infrastructure in some
districts.
According to ECCC (2018), a sustainable finance expert panel in Canada
recommended that the country's government (i) integrate climate-related risk into the oversight,
monitoring, and regulation of its financial system; (ii) grow the country's green fixed income
market; and (iii) establish a global standard for financing for transitional projects.

7.5 OCEANIA
Studies on green finance are few for nations on the Oceania continent.
According to NZGIF (2019), the government of New Zealand launched a green
investment bank there. 'New Zealand Green Investment Finance' is the name of the bank. The
bank's goal is to hasten investments that will lower New Zealand's greenhouse gas emissions.
A green investment bank is a governmental, quasi-public, or nonprofit organization
that was founded particularly to encourage private investment in domestic low-carbon,
climate-resilient infrastructure, according to the OECD. According to NZGIF (2019), the New
Zealand Green Investment Fund's purpose is to employ private capital to scale up carbon
reductions and investments in green and cutting-edge businesses. According to RIAA (2019),
New Zealand has already started to pursue green finance opportunities as a result of the
introduction of green bonds and a green investment fund.
Geddes et al. (2018) point out the considerable funding gap in Australia that is
impeding the widespread adoption of low-carbon technology. They contend that through
promoting private investment in low-carbon developments, state investment banks may be
instrumental in bridging the financing gap. They contend that state investment banks may foster
learning in the financial industry, foster confidence in green initiatives, and play a pioneering or
early-mover role in providing green financing solutions. Geddes et al. (2020) investigate the
legislative discussion on the Australian Clean Energy Finance Corporation, which is comparable
to the UK's green investment bank, and its creation and design. They discovered that every
discussion issue in Australia's political conflict was partisan. In Australia, discussions of the
state's role in the establishment and other higher-level establishment notions drew increased
attention.
7.6 GREEN FINANCE DEVELOPMENTS IN G20 COUNTRIES
The G20 nations' green financing developments from 2016 to 2017 are depicted in
Table 1 below. The top three countries for green funding are China, the United Kingdom, and
Mexico. These countries are followed by Turkey, South Africa, Brazil, France, and India. The
following categories best describe the green finance developments: (i) fostering international
cooperation for cross-border investment in green bonds; (ii) assisting in the establishment of
regional green bond markets; and (iii) enhancing the measurement of green finance operations
and their effects.
 7.7 DIFFERENCES IN GREEN FINANCE TERMINOLOGY
ACROSS CONTINENTS
Because policy makers and practitioners interpret green finance differently both in a
national context and a cross-border context, the terminology used to describe green finance may
differ across different nations and continents. Ultimately, country-specific terminologies for
green finance will converge into a single continental language that will enable continental
comparison of green finance terminologies. Some of the terms used in green finance often
throughout some continents are included in Table 2 below.
 8) CONCLUSION:
Green finance has emerged as a global issue in the development of sustainable economic
and financial systems. Concerns over environmental change and pollution are shared by all
countries. Finding potential green projects and determining whether they qualify for green
finance are necessary for more sustainable growth.ii) finance projects that reduce waste
production and recycle waste into compost or other products, iii) increase funding for all green
projects, iv) establish green projects and encourage replication, v) plant trees whenever possible,
viii) encourage developers to construct green buildings, and ix) finance eco-friendly products.x)
Microfinance will be expanded to generate green products with a very cheap interest rate. xi)
Financing will also be provided for rainwater collection, solar lighting, and other renewable
energy sources.Green funding is thoroughly examined in this essay with the goal of
demonstrating its importance for national development. Numerous issues are being brought
about by global warming. Experts on the environment and scientists agree that greenhouse gas
emissions are to blame. This study emphasized how considerably less greenhouse gas
emissions will result from green funding. By removing the obstacles and raising corporate
citizens' knowledge of the need for more sustainable growth, it may be said that India has a
huge potential to establish the green infrastructure required for green financing. We anticipate
that green financing will soon be widely accepted across all social strata.
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