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The rise of sustainable finance in India: what it is and why it matters

Sustainable finance is gaining significant traction in India, with investors increasingly focusing on the environmental, social, and governance (ESG) impact of their investments. The growing awareness of the need for sustainable investments is reflected in the rise of sustainable finance, which is reshaping the financial industry in India. This blog explores what sustainable finance is, why it matters, and how it is transforming the Indian financial industry.

What is sustainable finance?

Sustainable finance refers to the practice of investing in companies or projects that have a positive impact on the environment, society, and governance. It involves assessing the environmental, social, and governance risks and opportunities associated with an investment and ensuring that they align with the values and goals of the investor. Sustainable finance can take many forms, including green bonds, social impact investing, and ESG investing.

Why does sustainable finance matter?

Sustainable finance matters because it has the potential to drive positive change in society and the environment. It encourages investors to focus on the long-term impacts of their investments, rather than short-term gains. By investing in sustainable projects, investors can contribute to creating a more sustainable and equitable future for all.

How is sustainable finance transforming the Indian financial industry?

The Indian financial industry is rapidly adopting sustainable finance practices. The Reserve Bank of India (RBI) has introduced a number of measures to encourage banks to invest in sustainable projects. The Securities and Exchange Board of India (SEBI) has also introduced regulations requiring companies to disclose their ESG risks and opportunities.

In addition, there has been a rise in sustainable investing in India. According to a report by the Responsible Investment Association of India, the total assets under management (AUM) of sustainable funds in India grew by 35% in 2020, reaching INR 22,000 crores. This growth is expected to continue as more investors become aware of the benefits of sustainable investing.

Conclusion: Sustainable finance is reshaping the financial industry in India, with investors increasingly focusing on the ESG impact of their investments. By investing in sustainable projects, investors can drive positive change in society and the environment, while also generating financial returns. The Indian financial industry is rapidly adopting sustainable finance practices, and this trend is expected to continue as more investors become aware of the benefits of sustainable investing. The rise of sustainable finance is an important development for the financial industry and society as a whole.