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Nature’s Fury on a Rampage

Renjini Liza Varghese


Indeed, Nature’s Fury on a Rampage! For long, we have ignored the Natural warnings.

While the nation is limping back from the shock of the Wayanad landslides, we are hit with the news of a cloud burst in Uttarakhand, Malana dam rapture in Himachal Pradesh, and landslides in both states and floods (bulged rivers engulfing buildings). 14 casualties were reported from Himachal on 1st August alone.

As per news reports 32 rain-related deaths were reported in 24 hours from 7 north states. Considering all this climate casualties will easily cross 4-digit numbers this year. Recalling here, the numbers caused by nature’s fury were less than 400 last year.

Undoubtedly, extreme weather events like heat waves, droughts, landslides, cloudbursts, and flooding have been occurring in India. These events appear more frequently as climate casualties rise.

I would like to draw your attention to two important points here:

a) How vulnerable is India to climate change?

b) How to expedite remedial action?

As per a report published by the World Economic Forum, India is the most vulnerable country to climate change, followed by Pakistan, the Philippines, and Bangladesh, based on an HSBC ranking. The bank evaluated 67 markets on climate change vulnerability, extreme weather sensitivity, energy transition risks, and responsibility.

India is one of the countries highly prone to climate change. As per a Council on Energy, Environment, and Water (CEEW) report published in 2021, “more than 80 percent of India’s population lives in districts highly vulnerable to extreme hydro-met disasters.” This serves as a reference report for me as it is the first to include macro-level (district) assessments.

The study emphasized a few crucial points, including:

a) The southern region of India is most susceptible to the effects of extreme weather events, with the eastern, western, northern, north-eastern, and central regions following suit.

b) In the eastern and western regions of India, respectively, 59 and 41% of all districts are extremely susceptible to severe cyclone events.

c) India’s northeastern states are prone to flooding, while the country’s central and southern regions are more at risk of severe droughts.

d) The Climate Vulnerability Index (CVI) indicates that Assam, Andhra Pradesh, Maharashtra, Karnataka, and Bihar are extremely vulnerable to extreme climate events like floods, droughts, and cyclones.

According to the report, India’s climate vulnerability is primarily caused by an unsustainable landscape, inadequate infrastructure planning, and human-induced microclimate change.

Even though India is doing better than many of its global peers in terms of meeting its NDC targets, energy transition programs, and carbon emission reductions, the rise in incidents necessitates quick action.

Following are some suggestions that, if implemented on priority may help arrest the impact to a certain level.

a) Prepare a climate-ready community

b) Empower local bodies to tackle climate incidents

c) A crackdown on illegal/unauthorized/environmentally harming constructions

d) Ensure new constructions comply with the green norms

e) During infrastructural developments, secure areas that are landslide-prone with iron nets and safety tools

f) Promote sustainable ways at all levels

g) Stricter action against polluting entities or individuals

h) Reclaim land being commercialized in the environment-sensitive zones

i) Fast-track energy transition

j) More policies and regulations that enable climate action

I am an eternal optimist.

I am hoping we can calm Nature’s Fury.

I am hoping there will be action and that my hope does not remain, JUST HOPE.


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Indian Banks Taking a Green Leap

Sonal Desai


The Indian banking sector is taking a green leap!

As per IEA estimates, India requires Rs 160 billion per year till 2030 for its energy transition/decarbonization journey. That means the country has a large opportunity for green funding. It could be met with a combination of domestic and international funds. As a first respondent, domestic funds would be the target.

India’s plan to establish a Green Bank by 2023 could significantly impact the global market, despite requiring an estimated $1.5 trillion investment by 2030. On January 25, 2023, India issued the first tranche of its first sovereign green bond worth INR 80 billion (equivalent to $980 million).  On February 9, 2023, the Government of India announced the issuance of another INR 80 billion ($968 million) in sovereign green bonds. 

For the last couple of years, Indian entities including financial institutions have been cautiously taking steps towards green financing. But it is not visible yet. However,  a few headlines that caught my attention in the last few days stamp the inevitable.

  • Google, HSBC to offer venture debt financing option to GCR-Sustainability 
  • HDFC Bank raises $300M through maiden sustainable finance bond 
  • The DBS Bank supports the Indian arm of Louis Dreyfus to achieve sustainable finance for RSPO-certified palm oil procurement 
  • SBI raises $250 million through green notes

Incidentally, the Indian banking sector is working towards achieving net-zero targets by 2070.

Sustainable initiatives from the banks are no longer limited to extending support through CSR, digitization, or green energy adoption. These are taking the shape of true green financing products.

The Indian banks have embarked upon a slew of measures to support sustainable finance. Besides issuing green bonds, the banks are showing a keen interest in financing green infrastructure, renewable energy, water, and waste management projects, among others. 

No longer is the Indian bank transacting in a silo. A majority of the banks have gone paperless and are adopting renewable energy to promote sustainability internally. They are giving more weightage to the green factors while dealing with the external stakeholders.

And it is not just the global and domestic compliances that have triggered the change. They are active participants in the call to action to save planet Earth and limit the global temperature to pre-industrial levels by Paris goals. 

Green banking-the current scenario:

According to reports, the combined net profits of 32 listed private and public sector banks (PSBs) rose 40.56 percent to close to Rs 2. 29 trillion with both sets of banks crossing the Rs 1 trillion mark in net profits and a few recording their highest-ever net profits. 

Indian banks are introducing new financial products linked to green initiatives, attracting investment and encouraging businesses to adopt greener practices. There is a shift from investments only in the renewable sector to more sectors now.

The banks have a social responsibility to promote sustainable practices, including environmental contributions. Sustainable finance involves financing both current and transitioning to environmentally friendly performance levels. 

India has two finance organizations, Tata Cleantech Capital Limited (TCCL) and the Indian Renewable Energy Development Agency (IREDA), focusing on clean energy financing. IREDA provides funding for projects and plans to launch India’s Green Window, aiming to attract over Rs 210 billion in renewable energy investments. TCCL, a leading private sector Green Bank, has financed over 250 projects, reducing carbon emissions by nearly 16 MT annually.

SBI has launched the Green Chanel Counter and collaborated with Suzlon Energy Limited to generate green power. Other initiatives include tree planting, rainwater harvesting, and solar lamps in rural areas. 

Indian banks focus on supporting environmentally friendly projects like renewable energy and agriculture to reduce their carbon footprint. 

Global interest:

Green finance is gaining momentum in India’s economy as a tool for transitioning towards net-zero emissions. International organizations like the Asian Development Bank and World Bank have increased funding for green projects in India to reduce the gap in commercial investments in renewable energy and boost investor confidence. Indian green bond issuances reached $21 billion as of February 2023, with the private sector contributing 84% of the total.

Challenges:

Since 2007, India has promoted green financing, with Green Banks adhering to strict environmental standards. India’s green financing, including sustainability-linked loans, bonds, and equity investments, is undergoing continuous evolution, with increased demand driving innovation in this area. Currently, creating a Green Bank is unregulated, but effective regulation requires disclosing carbon emissions.

Green banks face challenges driving a reformative shift towards a sustainable economy, including limited funding, political and regulatory uncertainty, lack of awareness, limited market demand, risk management, and scalability. Additionally, they may struggle to expand their operations and finance larger projects.

How to overcome these challenges:

Green banks can promote sustainable finance by enhancing public awareness, increasing access to capital, developing safeguarding policies, focusing on innovation, and building a tailored track record. 

Technology plays a significant role in green finance, enabling banks to comply with reporting rules, improve practices, and model climate risk, with growing awareness of its potential.

The other methods are:

  • Creating marketing campaigns
  • Collaborating with other financial institutions
  • Working with governments to implement regulations requiring financial institutions to report on their ESG performance
  • Partnering with established institutions on sustainable projects
 Our take:

The Indian government should allocate capital towards regional green banks and windows, using low-cost public funds and government guarantees to finance renewable energy projects and reduce carbon emissions.


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Google, HSBC to Offer Venture Debt financing Option to GCR-Sustainability Companies

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HSBC and Google Cloud have partnered to expedite climate mitigation and resilience for businesses participating in the Google Cloud Ready (GCR)– Sustainability program through funding and support.

As part of the partnership launch, HSBC is financing LevelTen Energy with venture debt. LevelTen Energy is a GCR-Sustainability-validated company that facilitates over $5 billion in clean energy transactions.

Google Cloud plans to increase the number of partners in the program over the next two years. HSBC plans to secure $1 billion in climate tech finance for companies within the GCR-Sustainability ecosystem, aiming to connect with its customer base.

GCR-Sustainability is a Google Cloud validation program for companies aiming to reduce carbon emissions, enhance sustainability in value chains, and identify climate risks through ESG data processing.

During a declining investment in climate tech start-ups, partnerships and innovative financing solutions are crucial for accelerating growth and developing scale-appropriate solutions, said Natalie Blyth, Global Head, Commercial Banking Sustainability, HSBC. “By combining financing support, cloud technologies, and connectivity to partners across our combined footprints, we will help climate tech vendors accelerate their growth, and develop the solutions we urgently need at scale.”

“The scale of climate challenge requires a global ecosystem of technology providers bringing solutions that drive impact,” said Justin Keeble, Managing Director, Global Sustainability, Google Cloud.

Ross Trenary, Chief Financial Officer, LevelTen, said, “This venture debt package will enable us to scale our platform, which provides transaction infrastructure for carbon-free energy buyers, sellers, and financiers. HSBC’s global reach aligns with our international presence while giving us opportunities to connect with HSBC clients that are looking to achieve green goals.”


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4 Global Banks Exit SBTi

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Four global banks including HSBC, Standard Chartered, Société Generale, and ABN AMRO have exited the Science Based Targets initiative (SBTi).

Citing sources, Reuters reported that The banks have abandoned SBTi efforts to validate their goals because of concerns it could hinder their ability to continue financing fossil fuels.

According to media reports, some banks claimed the SBTi requirements would make it more difficult for them to work with and support businesses as they navigated the climate transition, especially those clients in less developed markets who still relied on fossil fuels for their energy needs.

ESG Today wrote that the banks declared their intention to resign before the organization’s planned introduction of a new standard that will evaluate financial institutions’ efforts toward achieving net zero. The standard will have stringent limitations on financing for fossil fuels.

Interestingly, every bank is a signatory to the Net Zero Banking Alliance (NZBA), an alliance of banks organized by the UN with the mission of advancing global net zero goals through their financing operations. Members of the NZBA pledge to set 2030 financed emissions targets, initially concentrated on important emissions-intensive sectors, and to transition operational and attributable greenhouse gas (GHG) emissions from their lending and investment portfolios to align with net zero pathways by 2050.

According to media reports that cited the SBTi, the organization got hundreds of responses in response to its exposure standard for June 2023. Consequently, it has incorporated draft Fossil Fuel Finance Position Paper criteria into a pilot version of near-term criteria and recommendations for financial institutions. The finalized criteria aim to remove common barriers to adopting science-based targets and reduce reliance on fossil fuels, highlighting the importance of financial intermediaries in decarbonizing the global economy.

2015: SBTi was founded as a collaboration between CDP, WRI, WWF, and UNGC, to establish science-based environmental target setting as a standard corporate practice
2022: SBTi established standards for financial institutions’ net zero goals
June 2023: SBTi released a position paper on fossil fuel financing restrictions


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