Growing Influence Of Green Finance On Building Sustainable Corporations

Over the years, Green finance has evolved as a powerful tool for fostering sustainability in the corporate world. It is estimated $10 trillion in investment by 2070, will be required to achieve net zero which is essential to India's shift to a green economy, according to EY.

India must employ green finance as a primary tool to facilitate the shift to a sustainable and environmentally friendly economy. To achieve this, combining economic growth with environmental responsibility can drive the long-term sustainability of countries and businesses, enterprises, and societies at the most foundational levels.

Why Green Finance is Essential for Corporate Sustainability
Climate risks are now one of the most important factors in business decisions, green finance is essential to corporate sustainability. Businesses that don't adopt sustainable practices run the danger of losing market share because investors, employees, and customers demand more comprehensive sustainability plans. This change is powering the global sustainable finance market, which is estimated to expand from USD 3.6 trillion in 2021 to USD 23 trillion by 2031 (CII).

To create long-term value and lower financial risks associated with environmental challenges businesses can incorporate sustainability into their business strategies. In a developing low-carbon economy, those who wait too long may have to deal with rising expenses, regulatory pressures, and reputational damage.

The Financial Benefits of Sustainability
Green Invetsment decreases operating costs in terms of saving energy, opens up better capital access from sustainably oriented investors, and maximizes brand worth by identifying itself with environmentally mindful consumers. India's Ministry of New and Renewable Energy has estimated that the renewable energy industry needs INR 15,000–20,000 crores in foreign direct investment each year. One prime example is the emergence of green bonds, which raise funds for climate-oriented projects while conveying environmental responsibility to investors.

Corporate Sustainability in a Changing Regulatory Environment
The global regulatory landscape is rapidly changing, hence governments has enforced stricter environmental regulations and demanidng greater openness in corporate susainability reporting.By funding initiatives that lower carbon footprints and increase environmental resilience, green finance helps firms adapt to such a situation. As stakeholder expectations shifts, regulators are acting to make sure that businesses disclose their sustainability initiatives and impacts to the public as stakeholder expectations shift. In India, an important development has been SEBI introducing the Business Responsibility and Sustainability Report (BRSR) in May 2021, superseding the Business Responsibility Report (BRR). The BRSR framework is aligned with international standards, such as GRI, SASB, and TCFD.

The Future of Green Finance in Corporate Strategies
The intersection of technology and finance is essential in promoting sustainability. As per Invest India, there are ongoing renewable energy projects worth $196.98 billion. With the developments in the blockchain and artificial intelligence, it will increase transparency in green financing by enabling companies to track developments and more accurately report sustainability performance. Also, stakeholders' demands for accountability are growing as climate change gains more attention, and businesses are being pushed to disclose their sustainability goals and environmental impact.

Hence, it is essential that businesses, financial institutions, and governments must work together to provide solid foundations for sustainable economic development. While, green finance and tax credits for low-carbon technologies will be crucial. At the same time, the private sector will need to use internal carbon pricing and invest in green technology to create real change.

The author, Rajesh Patel, is Co-founder and CEO of Snowkap