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India lacks a common taxonomy for only transition financing, which hinders the definition, measure and align financial flows, according to a new report by the Institute of Economy and Financial Energy Analysis (IEEFA).
As climatic commitments accelerate in India, the energy transition must also be fair, which means that the change of fossil fuels must be inclusive, equitable and support workers and communities that depend on carbon intensive sectors such as coal, steel, cement and automotive.
Interested parties emphasized the need for clarity about what constitutes only finances aligned in transition to mobilize capital effectively.
The fair transition financing ecosystem (JT) implies coordination between regulators, ministries, financial institutions, companies and civil society, each who plays interconnected and critical roles.
While sustainable financing is evolving in India, there is a significant gap in the financing of social priorities, such as workers’ rekilling, community resilience and regional economic diversification.
“Capital can be mobilized through public and private sources, guided by ministries through combined finance and incentives. Companies and their supply chains are key to the implementation, especially in the high broadcast sectors,” says the co -author of the report, Gaurav Upadhyay, energy finance specialist, IEEFA.
Financial instruments such as PSL (loans from the priority sector), green deposits and sovereign green bonds can be modified to include eligibility and impact criteria aligned with JT.
“For example, Sebi has started sustainability reports through products linked to BRSR and ESE, but JT indicators are still missing BRSR to include the social risk and JT metrics could help channel capital towards companies with credible transition plans,” says Labanya Prakash Jena, co -author and sustainable finance consultant of IEEFA.
Investing in capacities development, financial innovation and inclusive planning will ensure that the energy transition of India not only mitigates climate risk, but also empowers their people and regions for a more equitable future.
