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BFSI Chronicle, 11 Edition September2022
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and ESG (Environment Social and Governance) prospects of resilient development are at stake and
issues. The role and responsibilities of various will become further limited if global warming exceeds
stakeholders have been evolving over time. 1.5 degrees. The sustainable development may not be
The Financial Sector has a key role to play in the possible, if warming exceeds 2 degrees Centigrade.
current context and we propose to discuss the various As per a recent report of IPCC, apart from the
aspects relating to the same and the way forward. political commitments, Institutional framework is
required with clear goals and priorities that define
B. Broad features of the emerging issues responsibilities. Sustainable Development Goals are
The Paris Accord of December 2015, can be considered integrated and indivisible, and efforts to achieve any
as an important milestone in the direction of the joint goal may impact synergies or trade offs with other
efforts to tackle the climate change challanges. The SDGs. Sustainability, here, essentially means ‘meeting
Paris Agreement aimed at strengthening the global the needs of the present, without compromising the
response to the threat of climate change by keeping ability of future generations to meet theirownneeds.’
the global temperature rise well below 2 degrees
centigrade, preferably to 1.5 degrees centigrade India as the 6th largest economy and 2nd most
compared to pre industrial level. It also aims at populous country in the world has a crucial role to
appropriate reducing Green House Emissions to play, in the current context of global action against
achieve a climate neutral world by 2050. Financial climate change. Quite ambitious targets have been
flows, a new technology framework and an enhanced set by India for itself. India aims to reduce the
capacity building are essential aspects of this effort. emissions intensity of its economy by 45% by 2030
Climate Finance is needed for mitigation, because and reach net Zero by 2070. India also aims to shift
large scale investments are required to significantly to 50% non fossil power generation capacity by 2030
reduce the emissions. Climate Finance is equally and the build up of 500 GW power generation from
important for adaptation as lot of resources are non fossil sources. A series of steps have been taken by
needed to adapt to adverse effects and reduce the the Government of India under the Climate Change
impact of changing climate. Program, which include, The National Solar Mission,
National Mission for enhanced energy efficiency
This Paris Accord was followed by the Glasgow and National Mission for a Green India. Thease
climate pact of COP 26 Signed in November 2021 Gigantic goals require meticulous implementation
,which brought out further commitments on finance of a well thought out schemes and large amount of
for climate adaptation and transperancy and financial resources. All the stakeholders, namely,
reporting. Developed countries have pledged the Government, the corporates/entrepreneurs,
US Dollar 100 billion annually to developing and the Financial sector entities need to pitch
countries. One of the important outcomes of COP in their efforts in this challenging endeavour.
26 was the finalisation of the “Paris Agreement
Rulebook”. This set of rules lays out how countries C. Role of Financial Sector
are held accountable for delivering on their climate The Reserve Bank of India as an important regulator
action promises and self -set targets under their of Financial Sector of India has already started
Nationally Determined Contributions (NDCs) taking proactive steps towards bringing out a robust
regulatory mechanism to ensure a meaningful and
To avoid mounting losses,urgent action is required to effective role of Banks /NBFCs to tackle climate risk
adapt to climate change. At the same time it is essential through Sustainable Finance. The RBI joined the
to make deep cuts in green house gases like CO Central Banks and supervisors Network of Greening
2
,Methane etc. by way of mitigation steps. Any further the Financial System (NGFS) as a member in April
delay in concerted global efforts will miss the small 2021. Further, the RBI is also represented in the
and rapidly closing window to a sustainable life. The G-20 sustainable finance group, Financial stability

The Institute Of Cost Accountants Of India

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