Modelled after the Green Taxonomy developed by the European Union (EU), the government will certify sustainable activities in an effort to draw in more funding and provide investors with more support
According to three government officials, India is developing a programme to divide economic endeavours and technological advancements into categories of sustainability and non-sustainability to aid investors seeking to invest in green initiatives.
According to the proposal, which is modelled after the Green Taxonomy developed by the European Union (EU), the government will certify sustainable activities in an effort to draw in more funding and reassure investors. The three government officials spoke on condition of anonymity because they were not authorised to address the media.
The draft policy is being developed by the finance and renewable energy ministries. The proposed framework, according to the officials, is just the beginning of a drawn-out process of identifying sustainable initiatives and phased-out ones.
Some proponents of the policy assert that taxonomies developed by the European Union and South Africa help make green activities visible and release significant capital, while detractors claim that this is "greenwashing" — the technique of marketing a business or organisation to appear more ecological or ecologically friendly when in reality its operations pollute the environment.
Financial institutions, pension funds, businesses, and other participants in the financial system are all subject to the EU's disclosure requirements for green investments.
According to one of the officials, India will consider such disclosures to be best practise even though it has not yet decided to make them mandatory for firms.
To fulfil India's Nationally Determined Contribution (NDC) committments of achieving net-zero carbon emissions by 2070 - to the United Nations Framework Convention on Climate Change (UNFCCC), the country would need $10 trillion to $15 trillion in investment.
Yet another official said that to reach that goal, India will require $3 trillion in investment, and as a result, it is pursuing measures such as providing incentives for the production of solar panels, electric vehicles, and hydrogen fuel.
The second official predicted that while a small percentage of the financing will probably come from international bond markets, the remainder will be provided by international fund managers making local investments.
India sold its first sovereign green bonds last week for a total of 80 billion rupees at yields lower than those of equivalent treasury bonds.