Accelerating Green Finance in India: Definitions and Beyond

India faces significant climate vulnerability, with nearly 3% of its GDP at risk annually. To meet its Nationally Determined Contribution (NDC) goals, India requires $2.5 trillion in investments between 2016 and 2030, yet it is currently mobilizing less than 25% of this requirement. A primary barrier to scaling these investments is the lack of an agreed-upon definition of 'green finance,' leading to confusion and inconsistent reporting across the financial sector. The document proposes a combination of international practices, a principles-based approach (aligning with national goals and net carbon reduction), and a sectoral taxonomy to create a formal definition. Such a framework would enable better tracking of capital flows, mitigate greenwashing, and allow financial institutions to better assess climate-related physical and transition risks. The authors recommend forming a stakeholder task force to develop a comprehensive green finance roadmap that includes a common taxonomy, mandatory climate risk disclosures, and regulatory incentives to divert capital from carbon-intensive sectors.

• India is highly vulnerable to climate change, with an estimated 2.5% to 3% of its annual GDP at risk. Economic losses from extreme weather increased significantly, reaching USD 45 billion between 2008 and 2017, compared to USD 20 billion from 1988 to 2007.
• There is a massive financing gap for India's climate goals; the country needs $2.5 trillion from 2016 to 2030 to reduce GDP carbon intensity by 33-35% by 2030. In 2018, India mobilized only ~$18 billion in climate investments, far below the annual requirement of ~$160 billion.
• The absence of a formal, agreed-upon definition of green finance in India creates confusion among stakeholders and hinders the ability to track capital flows, which in turn leads to inaccurate assessments of progress toward NDC targets.
• India's financial sector is largely unaligned with global green finance initiatives. For example, only one commercial bank (Yes Bank) is a signatory to the Principles for Responsible Banking, and there is no Indian representation in the Network for Greening the Financial System (NGFS).
• The document suggests a hybrid approach for defining green finance in India, combining international practices, a sectoral taxonomy, and two core principles: alignment with national NDC goals and the achievement of net carbon emission reductions over a project's lifetime.
• Climate change presents systemic risks to India's financial stability, including physical risks (direct asset damage) and transition risks (policy and market changes). These risks have created an estimated exposure of $1.4 trillion for Indian banks and investors.

APA

Jena, L. P., & Purkayastha, D. (2020). Accelerating Green Finance in India: Definitions and Beyond. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/Accelerating-Green-Finance-in-India_Definitions-and-Beyond.pdf

Chicago

Jena, Labanya Prakash, and Dhruba Purkayastha. Accelerating Green Finance in India: Definitions and Beyond. Climate Policy Initiative, 2020. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/Accelerating-Green-Finance-in-India_Definitions-and-Beyond.pdf.

Wikipedia

{{cite report |last1=Jena |first1=Labanya Prakash |last2=Purkayastha |first2=Dhruba |title=Accelerating Green Finance in India: Definitions and Beyond |publisher=Climate Policy Initiative |date=June 2020 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/Accelerating-Green-Finance-in-India_Definitions-and-Beyond.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jena2020accelerating, author = {Jena, Labanya Prakash and Purkayastha, Dhruba}, title = {{Accelerating Green Finance in India: Definitions and Beyond}}, institution = {Climate Policy Initiative}, year = {2020}, month = jun, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/Accelerating-Green-Finance-in-India_Definitions-and-Beyond.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }