Climate change has far-reaching social and economic impacts, necessitating urgent and immediate action from various stakeholders including governments, corporates, financial regulator, and proactive action from financial institutions (FIs).
In the last few years, the momentum in the sector has built up to acknowledge that capital needs to shift to low-carbon activities. With regulatory and policy support, this has led to an increasing focus on channelling financial flows to climate action.
At the same time, there is an acknowledgement that risks posed by climate change to the economy could threaten the stability of the financial sector. Thus, FIs need to measure and manage these risks.
This brief explains some of the main ways in which FIs are responding to and participating in climate action.
Climate finance that aims to reduce greenhouse gas emissions is called ‘mitigation finance,’ and comprises 95% of all climate finance. As global temperatures rise, finance is also required to address the impacts of climate change, called ‘adaptation finance’. Currently, 98% of all adaptation finance comes from public sources.
This brief introduces the sources and uses of public adaptation finance, particularly in the context of India.
Climate change Climate change is a global problem and requires all countries to take effective, concerted, and collective action. In the early 1990s, countries joined the first international treaty, the […]
In recent years, growing consensus has emerged that capital needs to shift from the premise of ‘do no harm’ to ‘create positive impact’. This has helped to build momentum for financing of more green and sustainable activities.
Amid the rapid expansion of sustainable finance, this and the related terms of ‘climate finance’ and ‘green finance’ are often conflated. While there is no universal consensus on a definition for these terms, this brief explains the relationship between these concepts.
Climate change is often described as a stock-flow problem. The rise in global temperature depends on the concentration – or ‘stock’- of GHGs in the atmosphere. Over the years, human-induced […]