SYMBIOSIS INTERNATIONAL DEEMED UNIVERSITY

COMPARATIVE ANALYSIS OF GREEN FINANCE

REGULATIONS IN INDIA AND ITS CONTEMPORARIES

SUBMITTED BY

Sai Harshitha K- Prn: 20010323102 Harsimram Kaur- Prn 20010323163

Subham Bhowal- 20010323168 Shubang Sharma- 20010323121

CLASS OF 2024- DIVISION B- SEM 8

Symbiosis Law School, Hyderabad

Under the guidance of

Dr. Sanu Rani Paul

Assistant Professor

Symbiosis Law School, Hyderabad.

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ABSTRACT The paper presents a comparative analysis of green finance regulations
around the world with a specific angular focus on green finance in India and how it compares
to the contemporary jurisdictions with prominence in green leadership. It explores the
variations of measures taken by different nations around the world in order to lead their
respective countries in green finance. The research paper contains critical observations with
regard to the effectiveness of methods implemented. The intention in writing this paper is also
to highlight the extent to which these nations of prominence are lagging behind in their goals
and contractual agreements with regard to the Paris Agreement on Climate. The competitive
nature of these superpowers in achieving sustainable development faster and more
conveniently than their counterparts is well documented. The paper serves as a mirror to
contemplate the gap between the intended results and the actual outcomes of current green
finance instruments. The picture of impending failure is not a pleasant one. The research
focuses on scope and limitations of current green financing sectors and makes suggestions as
to the expansion of this green financing concept to go beyond its boundaries. The paper is
concluded with suggestions in regard to enhancing inter- governmental cooperation and
shifting to renewable and greener sources of energy. The leap from fossil fuels to a fully
regenerating source of energy is a huge one and it can only be made possible by combined
efforts, international cooperation and mutual understanding.

Keywords: Green Financing, Renewable Energy, Sustainable development, BRICS, EU,

India.

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 CHAPTER I

INTRODUCTION
The term “green finance” can be described as financial arrangements which are meant
particularly for the use in the ecological sustainable projects and programmes which address
the issues of climate change. This includes energy production from renewable sources such as
solar, wind or biogas; which refers to the clean transportation with the reduced amount of
greenhouse gas emission; also includes the more energy efficient projects, such as the green
buildings, waste management, which consists of the recycling and effective way for disposal
of waste and conversion of energy. These are some of the examples of the environmentally
sustainable projects.

Furthermore, the projects which on the long run meets the basic norms are being considered as
sustainable under the Green Debt Securities disclosure requirement which further includes the
biodiversity conservation, sustainable land use, including sustainable forestry and agriculture,
sustainable waste and water management, and climate change adaptation.

Various of the new financial mechanisms, like green bonds; carbon market instruments, like
carbon taxes; and new financial organisations, like green banks and green funds, are being
formed to address the financial demands for these kinds of initiatives. These then collectively
make up the green finance.

Green finance is one of the main issues being discussed in the broader discourse regarding
the sustainability of economic growth. Nowadays, we frequently choose a route that
sacrifices the environment in order to attain the rapid economic development. The depletion
of natural resources by humans, coupled with environmental degradation and widespread
pollution, poses a serious threat to population health and makes sustainable economic growth
challenging. In order to protect and greatly improve the environment, using environmentally
friendly technologies has become crucial for nations all over the world. But in order to build
or adopt ecologically friendly activities, a significant amount of funding and the appropriate
incentive system are required. Humans can take the help of the Land and manpower which is
to be added to the list of resources after money is diverted from traditional businesses and
into environmentally friendly and green sectors.

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LITERATURE REVIEW
1. “While the decisions regarding the investment and financing the financial institutions
take environmental protection into account, which then operates the cash into the green
industries. Here this approach examines all the adverse effects on the environment how
we should prepare ourselves to strike a balance between excessive natural resource
exploitation and economic growth.”

Shipalana, P. (2020). Green Finance Mechanisms in Developing Countries: Emerging

Practice. South African Institute of International Affairs.
http://www.jstor.org/stable/resrep28377

2. A lot of new technologies and their combination have come forward under the name
Fintech. It has brought us the lot of chances as firms in the financial services sector
benefit from technology's ability to lower friction and provide solutions that work far
better. However, because this technology is still in its infancy and its effects have not
yet been fully understood, research is needed to determine how it will affect the creation
of a superior, long-lasting foundation for economic growth. Quality economic
development is the result of numerous elements working together.

Bel, E. (2021). Key Stakeholders in Financing Green Growth. In Growing Green: Catalyzing
Climate Finance in African Markets (pp. 8–13). Atlantic Council.
http://www.jstor.org/stable/resrep31870.6

3. If economic growth is attained by the production of renewable energy, the environment

and the economy benefit in the long run. It is observed that the emergence of high-
quality economic development is complex, influenced by a variety of elements including
organisational, financial, political, and technical innovation.

Singh, R. (2008). Potential of a Carbon Finance Fund. Economic and Political Weekly, 43(44),
17–19. http://www.jstor.org/stable/40278123

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 4. Where variables should be to enable sustainable economic development, green finance
fills the gap. Green finance facilitates more effective resource allocation and
environmental preservation. Research indicates that green finance influences the
environment, economy, and economic institutions in a way that promotes high-quality
economic development.

Weber, O., & Saravade, V. (2019). Green Bonds and the Financial Sector. In Green Bonds:
Current Development and Their Future (pp. 3–4). Centre for International Governance
Innovation. http://www.jstor.org/stable/resrep24966.8

5. China, Brazil, and European countries stand out as key comparators in terms of their green
financing initiatives. European nations have pioneered initiatives such as carbon pricing,
green investment banks, and sustainable development funds, demonstrating a strong
commitment to environmental sustainability. Comparative analysis reveals that while each
country has unique challenges and approaches, there are common themes such as the
importance of policy coherence, institutional capacity building, and stakeholder engagement
in driving green finance agendas.

Lüdemann, C., & Ruppel, O. C. (2013). International Climate Finance: Policies, Structures and
Challenges. In O. C. Ruppel, C. Roschmann, & K. Ruppel-Schlichting (Eds.), Climate Change:
International Law and Global Governance: Volume II: Policy, Diplomacy and Governance in
a Changing Environment (1st ed., pp. 375–408). Nomos Verlagsgesellschaft mbH.
http://www.jstor.org/stable/j.ctv941vsk.19

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STATEMENT OF RESEARCH PROBLEM
The question that has been posed in this paper is that how the Indian scenario with respect to
green financing regulations compare to that of the different jurisdictions worldwide. Green
finance regulations refer to legislations, rules and regulations by a State in order to encourage
industries to adopt “greener” and more environment-friendly methods of production. These are
the instruments which are implemented in order to incentivize industries to go green. In this
research paper, a crucial question is being put forward: how does India compare to the rest of
the world when it comes to implementation of green finance products and instruments such as
green credit, green insurance, green bonds and green venture capital funds? To that effect, the
research will focus on statutes and other subordinate legislations in India and compare them to
prominent jurisdictions worldwide.

RESEARCH METHODOLOGY
Doctrinal research inquires into the laws surrounding a specific topic. Doctrinal research is
defined as a thorough examination of the legal doctrine, its development, application, and the
legal justification for it. The scope and scope of the issues covered by this research are
constrained.

The next type of research is “non-doctrinal research” which is also known as “socio-legal
research”. In this research methods are taken from other disciplines to basically generate the
empirical data that answers research questions. The nature of the non-doctrinal research is that
it seeks various social facts, relationship od laws with those facts, impact of law on society and
such things like that.

The present research is sometimes empirical and partly based on theological research.
Doctrinal research is the idea of referring to and analyzing the data that is already available,
such as concepts, case laws, and statistics. According to the researcher, the notions and
fundamental rules that are currently in place, as well as how they interact with one another,
are what mostly drive the current research. It is recommended that doctrinal study be
preferred in order to conduct successful research on this topic, and that different pertinent
laws be analyzed. The researcher also believes in not restricting the research methodology to
analytical and prescriptive tools but also incorporates secondary and tertiary empirical data

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which helps in further critical analysis of the research topic. For this research data is taken
and from secondary source books and articles are referred. Hence, in researcher’s view, these
tools adopted for the current research are apt for the topic discussed.

CHAPTER II

GREEN FINANCING INSTRUMENTS IN BRICS

The green financing method accelerates development towards a more environmentally
conscious era by funding green projects and enabling the transition away from fossil fuels. This
strategy includes investing in renewable and clean technology, funding sustainable organic
resource-driven economies, and developing climate-savvy economies. Green finance refers to
providing investments, loans, or cash to assist ecologically sustainable operations. As the world
grapples with the impacts of climate change and the pressing demand for decarbonisation,
awareness in how finance may help to achieve sustainable development has grown. Green
finance is now an important tool in this pursuit; the phrase refers to financial instruments and
monetary investments designed to assist green initiatives and businesses.

In response to concerns about the adverse effects of fossil fuel dependency on the environment,
the BRICS countries have prioritised environmental responsibility in their policies.

2.1 BRAZIL:
Brazil's green funding strategies have traditionally prioritised efficient land use, forests, and
farming. The “Amazon Fund”, which aims to mitigate, track, and combat deforestation while
additionally advocating resilience in the Amazon region, is a significant example of Brazil's
dedication to using financial instruments to safeguard the environment. 1 Managing public
forests as well as conservation areas involves environmental oversight, surveillance, and
assessment, sustainable forest management, viable economic activities, ecological and
economic zoning, exclusive arrangement, and agricultural enforcements, maintaining
biodiversity and use, and deforestation recovery.
The “RenovaBio” Programme This biofuel programme, established as part of Brazil's

1
What is Amazon Fund, Brazilian Govt. https://www.amazonfund.gov.br/en/amazon-fund/.

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determination to the Paris Agreement,2 intends to enhance sustainable biofuel production while
also reducing releases of greenhouse gases.
Central bank resolution in 2014,3 necessitates that banks must handle risks associated with
sustainable initiatives, particularly green ones. It advocates for taking sustainability into
account while managing financial risks. The National Development Bank (BNDES) provides
loans for long-term environmental initiatives at competitive rates.4 This promotes renewable
energy and emphasises the importance of development banks in green financing. The first
fundamental effort is the “Protocolo Verde (Green Protocol, or Protocol)”, which was
established voluntarily in 1995 by five Brazilian state-owned banks and the Ministry of the
Environment updated in 2009 by the Brazilian banking organisation. 5 Brazil's Green Protocol
is an opt-in banking engagement that seeks to promote green growth and socio-environmental
responsibility through a number of ideals, including taking into account socio-environmental
influences as well as expenses in handling assets, client and project exposure assessments, and
including socio-environmental criteria into credit evaluations.

Brazil utilises green bonds and loans to support environmental initiatives. They have been
available since 2015 and cover a wide range of topics, including renewable energy. This
demonstrates Brazil's multifaceted strategy of employing legislation, promotions, and financial
instruments to make the economy more ecologically friendly. Brazil imposes taxes such as
“ICMS Ecológico” to encourage local governments to invest in environmental initiatives. 6 It is
a state tax on the flow of goods, electricity, rendering of interstate and intermunicipal
transportation, and communication.

2.2 RUSSIA:

Russia's transition to a green economy has the potential to generate new employment and
businesses while supporting sustainable practices that assist the most disadvantaged. Russia is

2
L.L.B Lazazo, C.S Grangeia, L Santos, et al., LL Giati, What is green finance, after all? – Exploring
definitions and their implications under the Brazilian biofuel policy (RenovaBio), 2 JOURNAL OF
CLIMATE FINANCE. SCIENCE DIRECT, March (2023).
3
Country Progress Report, Sustainable banking Network, INTERNATIONAL FINANCE
CORPORATION, WORLD BANK GROUP (2022).
4
Ibid.
5
Brazil’s Green Protocol, FREEN FINANCE PLATFORM, (2008).
6
Brazil Corporate and other taxes, WORDWIDE TAX SUMMERIES, 28 November (2023).

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developing a strong green finance ecosystem through selective inclusion, legislative efforts,
and governmental projects.

2.2.1 Targeted Inclusion: Russia has signed up to the “United Nations Principles for
Responsible Investment” (PRI), confirming its dedication to sustainable and responsible
investment.7
Expert Working Group (Bank of Russia) is dedicated professionals at the central bank are
actively shaping green finance through responsible investing programmes.

2.2.2 National Policies: National Endeavour “Ecology”, is multi-year endeavour demonstrates

Russia's ecological commitment.8 Notably, a large amount of the finance originates from
private funds, indicating greater social involvement.

2.2.3 Regulatory framework: Additional rules, such as improved criteria for issuance
securities, are especially addressing green bonds. Those regulations require precise project
details and track fund allocation.

2.3 INDIA: Green financing has gained prominence across the world, including in India. As
the world's most populous country, with roughly 1.4 billion people, India's carbon intensity has
a direct influence on global emissions and hence climate change. However, it has been
significantly reduced by 33% from 2005 to 2023 with growing reliance on renewable energy. 9

The “National Action Plan on Climate Change” (NAPCC) 10 highlights India's climate change
strategy, which comprises eight national missions focused on solar energy, energy savings,
agricultural sustainability, and conserving water. The “Securities and Exchange Board of
India” (SEBI) serves as the watchdog, assuring the transparency and correct use of funds
acquired through green bonds. India is leading the way in green financing, using green bonds
as its primary weapon. By early 2020, they had issued a sizable $10.3 billion, placing 15th
internationally. These grants prioritise renewable energy initiatives (83%), clean mobility
(13%), and sustainable water and land use (4%).11

7
Russia Unlocking opportunities for Green investments, WORD BANK December 18 (2018).
8
Ibid.
9
India’s Emission Intensity Reduced by 33%, THE HINDU, December 3 ( 2023).
10
NAPCC Report, MINISTRY OF ENVIRONMENT, FORESTS AND CLIMATE CHANGE, (2021).
11
Farah Imarana Hussain et a., Helena Dill, India Incorporates Green Bonds into its Climate financial
Strategy, WORLD BANK BLOGS, June 12 (2023).

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Creating a sustainable future demands a collaborative effort. India has been a leading example
of this. We must raise people out of poverty by promoting inclusive development that takes
into account climate change. This includes attaining national growth while minimising
environmental impact, conserving energy, and applying climate-resilient technology. New
market instruments, legislation, and volunteer activities can hasten growth. To make it happen,
we need everyone on board such as civic society, local governments, and corporations
collaborating.

2.4 CHINA:

China is a significant player in the green financing market China is the world's second-largest
issuer of green bonds, behind the United States, they recovered from a drop in 2020 and are
now on pace for strong issuance in 2021.12
Product Diversity Green financing in China extends beyond merely bonds. They provide a wide
range of “financial solutions, including green loans, green deposits, green funds, and green
insurance”, to meet a variety of financing needs.

China aspires to achieve carbon neutrality by 2060, using its “green financial system” as a
crucial weapon. 13 This method, as defined in its environmental policy, raises funds for eco-
friendly projects. Banks will make loans, green bonds will draw investment, and institutional
investors will be encouraged to engage. China is greening the banking industry to reduce
emissions, but this presents a hurdle. Banks hold numerous loans to high-carbon industries, so
a sudden move away from them might cause financial instability. It's a delicate balance between
supporting environmentally friendly practices and managing the financial risks associated with
shifting away from high-carbon businesses.

2.5 SOUTH AFRICA:

South Africa is developing a greener finance system to combat climate change. A significant
tool is their “green finance taxonomy,” which defines what constitutes an ecologically
beneficial investment. The South African framework intends to enable investors, issuers,

12
Zenon Capron, China Aims to become a Leader in World Green Finance, FORBES, April 19
(2023).
13
Ibid.

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lenders, and other financial market players evaluate the environmental credentials of their
portfolios and business operations. 14 This transparency draws investors to real green ventures.
Climate financing is a primary topic, with a particular emphasis on boosting investment for
renewable energy sources such as solar and wind power.

The government, notably the National Treasury, plays an important role in developing a solid
green finance system by establishing guidelines and working with stakeholders. However,
swiftly scaling up this system to fulfil ambitious climate targets is still a difficulty. Once an
activity is designated as "green capital worthy," the chance to get financing from a variety of
resources (bonds, debt, grants, etc.) grows, and investment may flow into the organisation from
a wider range of sources. In May 2020, a study titled “Financing a Sustainable Economy,”
which was revised in October 2021.15 This programme seeks to direct green investments
towards both economic development and climate resilience, so providing critical finance for a
sustainable and expanding South African economy. The green finance taxonomy has an
influence on the South African financial sector by identifying opportunities for the transition
to an environmentally friendly, low-carbon, climate-resilient, and culturally inclusive
economy.

2.6 Illustrations:

14
Charlaine Bartjes, The South African Green finance Taxonomy, GREENOMY, June 21 (2022).
15
Financing a sustainable economy, NATIONAL TREASURY OF SOUTH AFRICA, (2021).

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CO2 Emissions of BRICS Countries. 16

CO2 Emissions in Different Sources of Brics Countries- Solid Liquid and Gaseous Fuel
Consumption. 17

Green Financial Index of BRICS Economies.18

TABLE- 2.7 IMPACT OF GREEN FINANCE ON THE ECONOMIES OF

BRICS:

16
Maxwell Chukwudi et al., Nicholas Ngepah, The Drivers of Economic Sustainability in BRICS, Do
Green Finance and Fintech Matter, 3 SCIENCE DIRECT, December (2023).
17
World Bank Report (2017).
18
Supra Note 16.

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 Impact Green Bonds GDP Green Finance Country
Issued ( USD USD Trillion) 20 GDP
Trillion)19 percentage
Carbon 480 18.13 2.65 China
emissions
reduction.21
Renewable 80 3.57 2.24 India
Energy
Capacity
Addtion.22
Million 35 2.14 1.64 Brazil
Hectares of
Amazon Forest
Conservation.23
Energy Efficient 5 1.86 0.27 Russia
Improvement
%.24
Green sector 3 0.42 0.71 South Africa
jobs created due
to new tax
policies. 25

19
Initiative Climate Bonds. https://www.climatebonds.net/. The data regarding green bonds has been
complied after reading the incentives from these.
20
World Bank Data. https://data.worldbank.org/. The GDP analysis of BRICS has been done through
this.
21
China’s Sustainable Debt, Climate Bond Initiative report, CO2 Emissions. (2022). Data has been
complied through this.
22
Alok Raj Gupta, Financing India’s Renewable Energy Vision, OBSERVER RESEARCH
FOUNDATION, May 12 (2023).
23
Supra Note 1
24
World Energy Outlook Report (2023).
25
C40 Cities Launches Research on South Africa Green Jobs, C40 March 29 (2022).

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TABLE- 2.8 UNLOCKING THE GREEN FINANCE POTENTIAL IN
BRICS: CHALLENGES AND OPPORTUNITIES:

STRENGTH CHALLENGE OPPORTUNITY

Promotion of sustainable Difference in Innovation and restructuring
projects – Hydropower, solar implementation- in terms of of industries.
wind, etc. GDP, Inflation, Deflation,
Supply and Demand, Trade.
Support for energy Dependence on fossil fuels is Promoting renewable energy
Efficiency- Industrial increasing- crude oil
Processes. extractions, off shore
drillings, sea contamination.
Investment in Infrastructure- Implementation of Green Financial aid to implement
Green projects, Public Credit Efficiently and climate resilient operations
Transport. promotion of Green finance and incentives in public and
Techniques among private sector enterprises.
Coporations.
Conservation and Pollution control and Advancement in
Biodiversity Protection- reduction in emissions. conservational awareness
Natural Habitats, Sustainable through sustainable banking
Farming. and taxation policies for
pollution.
Fintech expansion- Green Challenges putting forth Adress the gaps in policies to
bonds, ventures, Insurance policies for the three sectors attract investor for green
of economy finance and to enhance
engagement capabilities.

The BRICS countries have potential for a future of sustainability through green financing.
Their green bond issue, renewable energy investments, and environmental initiatives
demonstrate an increasing commitment. Analysing effect in terms of economic
incentives provides useful information, but there are certain limits. The BRICS countries
should adopt policies and methods to conserve and safeguard ecosystems and biodiversity in
resource-rich areas. This can be accomplished by rigorous surveillance, compliance

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enforcement, and penalties for violation. Encouraging openness and accountability in resource
firms' performance on environmental issues reporting is also vital.

CHAPTER III

3.1 EU AND CHINA: AN ONGOING BATTLE FOR GREEN

LEADERSHIP

3.1.1 Green Finance in China

In China, the elementary concept of green finance is contained in the 2016 “Guide to Creating
a Green Financial System”26. It comprises areas where green finance could be taken up on a
pilot basis, green loans, partnerships of a public-private nature and green funds, green security
and insurance, credit rating on the environment and environmental risks 27.

3.1.2 Green Finance in the European Union

The European Union has always been ambitious to be a leader in the global fight against climate
change. The European Green Deal introduced by the European Commission in December, 2019
ushered in a new concept for turning Europe into a first of its kind climate-neutral continent 28.
The European climate law, which aims to turn Europe into a climate-neutral continent by 2050,
was created as a direct result of the European Green Deal. Climate neutrality enumerates net
zero greenhouse gas emissions by countries in the EU in its entirety and investment in green
technologies. The law ensures that policies of the EU are aligned with this goal and that the
various economic and social sectors play their crucial roles in the achievement of the said
target.

26
United Nations Environment Programme, Establishing China’s Green Financial System (UNEP, April
2015)
27
Ermakova, E.P. (2020) ‘The development of the legal framework for “Green” finance in Russia, the
EU and China: A comparative legal analysis’, RUDN Journal of Law, 24(2), pp. 335–352
28
Amin, R. (2023) Islands and oases: EU-china climate diplomacy in times of geopolitical challenges,
E3G.

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3.1.3 Relationship between EU and China

The official channels for dialogue are usually the “Conference of the Parties (COP)” under the
“UNFCCC (United Nations Framework Convention on Climate Change)”. Joint statements
had been issued by both EU and China prior to both COP21 in Paris and COP26 in Glasgow
which was indication by both parties to stay steadfast in their commitments to the climate
agreements of UN of which they are the signatories. The “EU and China Partnership on Climate
Change” issued in 2005 at the 8th EU-China Summit is the basis of cooperation on climate
change. Subsequently, in 2010, 2015 and 2021, the commitment to cooperate on climate was
renewed29.

3.1.4 Bipartisan Conflict in EU-China relationship

The relationship between EU and China has been a strained one with each party having been
on the lookout to gain an upper hand on the other with respect to effectively implementing and
utilizing technology to tackle climate change. In the EU-China strategic outlook, China had
been defined, inter alia, as a “competitor and a systemic rival”. Even though it was speculated
that climate cooperation between EU and China could be an “island of opportunity”, the
geopolitics between the two parties was extremely disagreeable to either of them.
Notwithstanding that both the EU and China had suffered serious setbacks in the achievement
of their climate goals due to reasons such as heat waves and the Russia-Ukraine war,
cooperation does not appear to be in the agenda of either of them30.

3.2 IMPACT OF THE RUSSIA UKRAINE WAR

The Russia-Ukraine war has severely impacted economies across the world. International trade
and commerce has taken massive hits after the war. With sanctions being imposed on several
nations worldwide and the large-scale movement of military vehicles, artillery and defence

29
Ermakova, E.P. (2020) ‘The development of the legal framework for “Green” finance in Russia, the
EU and China: A comparative legal analysis’, RUDN Journal of Law, 24(2), pp. 335–352
30
Ermakova, E.P. (2020) ‘The development of the legal framework for “Green” finance in Russia, the
EU and China: A comparative legal analysis’, RUDN Journal of Law, 24(2), pp. 335–352

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systems, as well as the operation of aircrafts, and other weapon systems, ammunition and
armoured vehicles has not only accelerated the arms trade at a break neck pace but also forced
the major powers involved into seriously considering greener sources of energy. On the one
hand, intense use of fossil fuels for the war was a serious setback. On the other hand, sanctions
on Russian supplies through their gas pipelines majorly impacted economies of European
nations which are dependent on such supplies. The war exposed the vulnerabilities of the EU
and intensified the struggle to adopt alternate means of energy production and consumption.
However, it is extremely difficult to shift to renewable energy sources on such short notice. To
tackle the energy deficit, therefore, several nations fell back on traditional fossil fuels like coal.
Such despair in the absence of Russian energy has discredited the position of the EU as a leader
with respect to climate, especially in the Global South. China, however, was in no better
position after the war started as it too had to fall back upon coal.

3.3 CHALLENGES TO THE CHINA EU COOPERATION

There are several impediments to fostering cooperation and joint action between EU and China.
The Carbon Border Adjustment Mechanism (CBAM) of EU was condemned by China as being
a unilateral move and trade barrier set up by EU. The CBAM is intended to cut down carbon
consumption at source by forcing exporters in China to adopt greener manufacturing methods
and usage of materials which are low in carbon-energy and are greener in their nature, thus
cutting down on greenhouse gas emissions at the source. Also, both the EU and China are way
off their climate trajectory goals when it comes to the Paris Agreement. The following is a
graph published by OECD.

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Thus, even though both parties are willing to engage in climate dialogues at high levels, there
is significant tension and bad faith when it comes to publicly calling out each other on their
shortcomings. In the broader picture, there always exists geopolitical conflicts which shift the
focus away from the primary issues.

3.3.1 Response to the European pressure

The lagging behind in achieving its climate goals and the subsequent pressure tactics by Europe
was not lost on China. China revealed its new Environmental, Social and Governance (ESG)
disclosure rules as it seeks to adapt itself to the heightened standards of European requirements.
Even grudgingly so, China is correct in assessing the European market and is forced to bend to
the pressure by EU to align its trade practices with its climate goals. China lost about $3.7
billion dollars in the first 14 days of August, 2023 as investors pulled out rapidly, leading to a
fragile economic situation31.

31
Lee, S.T.T. (2024) China proposes new ESG rules to keep up with European guidelines, Bloomberg

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The CBAM regulations further complicated the situation. In an effort to attract greater foreign
investors and to leave no stone unturned in preventing existing investors from exiting the
Chinese equity market. The new ESG regulations intended to ensure the same. China also
intends to expand the horizon by extending ESG investments to high-emission industries like
agriculture and steel, thereby helping in their transition to greener manufacturing and
production. The new ESG measures could attract investments to liquor and coal as well, if it
aligned with China’s agenda of “rural development”. Even then, experts suggest that the new
ESG regulations bring it in line with the EU standards.

CHAPTER IV

4.1 GREEN FINANCE IN INDIA

The term "green finance" talks about financing arrangements intended specifically for
initiatives that address climate change or are sustainable in nature. The projects that are
environmentally sustainable contain energy generation from “renewable resources” like “solar
power, wind, and biogas”; clean transportation with reduced “greenhouse gas” emissions;

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energy-efficient initiatives like green buildings; as well as management of waste which
includes recycling, effective disposal, and conversion of energy, among other things.
Additionally, projects that meet the criteria for being considered sustainable under the Green
Debt Securities disclosure standard involve preserving biodiversity, sustainable land
utilization, including “sustainable forestry and agriculture”, sustainable waste and water
management, and climate change adaptation (Securities Exchange Board of India 2017). To
meet the financial demands for these kinds of activities, new financial institutions such as
green funds and banks, carbon market instruments such as carbon taxes, and new financial
mechanisms such as green bonds are being established. Collectively, they make up green
finance32.

We attempt to evaluate the development of green financing in India in this study. A few of
India's most significant efforts will be covered in Section II. We will discuss the development
of green financing in India in section III. Section IV discusses the path ahead.

4.1.1 Public policy in India

India began putting more of its attention on green financing in 2007. The significance of climate
change and global warming in the larger context of sustainable development is mentioned in a
December 2007 Reserve Bank statement on “Corporate Social Responsibility, Sustainable
Development and Nonfinancial Reporting – Role of Banks. 33”
The “National Action Plan on Climate Change (NAPCC)” 34
was created in 2008 with the
intention of outlining a comprehensive framework of policies for reducing the effects of climate
change (Jain, 2020). The “Ministry of Finance” established the “Climate Change Finance Unit
(CCFU)” in 2011 to serve as a “coordinating body” for the different organizations in charge of
green finance in India. Since 2012, implementing the “sustainability disclosure” standards has
been a major strategic initiative.
Since 2012, the top 100 listed companies at the “BSE (Bombay Stock Exchange) and NSE
(National Stock Exchange)” based on market capitalization have been required by the “Security
and Exchange Board of India (SEBI)” to produce annual corporate responsibility reports, which

32
https://development.asia/explainer/green-finance-explained (Asian Development Bank)
33
Suman Kalyan Chaudhury, Practices Of Corporate Social Responsibility (Csr) In Banking Sector In
India: An Assessment, JOURNAL OF ECONOMICS AND ICT (2012).
34
National Action Plan on Climate Change (NAPCC), Ministry of Environment, Forest and Climate
Change, December 1, 2021, available at
https://static.pib.gov.in/WriteReadData/specificdocs/documents/2021/dec/doc202112101.pdf.

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are periodically amended. The disclosure criteria for green bond issuance were outlined in
guidelines published by SEBI in May 2017. Furthermore, in accordance with the Companies
Act of 201335, the “Ministry of Corporate Affairs” mandated the reporting of progress on
“Corporate Social Responsibilities (CSR)”. The Committee on Corporate Governance Report
from October 201736 suggested that the board of directors shall hold a minimum of one annual
meeting to deliberate on matters such as strategy, budgeting, board evaluation, risk
management, ESG (Environmental, Social and Governance) and succession planning.
Incentives related to finances and taxes have been implemented in India. The aforementioned
benefits are consistent with India's pledges made in the 2015 Paris Agreement to attain 40%
installed electric power capacity from non-fossil sources by 203037 and to reduce greenhouse
gas emission intensity by 33 to 35% below 2005 levels. In most states, the Government of India
(GOI) provides institutional, residential, and social sectors with a subsidy equal to 30% of the
rooftop solar panel installation cost38. Up to 70% of the installation cost is covered by the
subsidies in some states that fall under the special category39. Furthermore, recipients are
eligible for a “generation-based incentive”, in which they would earn ~2 per unit of generation,
provided that the annual generation reaches 1100kWh or 1500kWh. Additionally, the
government may set a tariff for the extra energy to be sold.

Furthermore, the Government of India (GOI) launched the Faster Adoption and
Manufacturing of Hybrid and Electric Vehicles (FAME) scheme in its two stages in 2015 and
2019 with the goal of improving credit availability, lowering the upfront cost of ownership
for all cars, and building the necessary infrastructure (like charging stations) to promote the
manufacturing and retailing of green vehicles (Jain, 2020). To address the high initial costs of
such vehicles, the State Bank of India has introduced a "green car loans" policy for electric
vehicles with a 20 basis point lower interest rate and a longer repayment window than the
existing auto loans (Jain, 2020).
In the field of renewable energy, the government has also introduced a Production Linked
Incentive (PLI) Scheme for the generation of high efficiency modules. Additionally, the

35
https://www.mca.gov.in/Ministry/pdf/FAQ_CSR.pdf
36
Report of the Committee on Corporate Governance, Uday Kotak, Chairman, Committee on Corporate
Governance, Mumbai, October 5, 2017.
37
https://climateactiontracker.org/countries/india/pledges-and-targets/
38
Solar Subsidies and Power generation, THE ECONOMIC TIMES.
https://economictimes.indiatimes.com/small-biz/productline/power-generation/solar-subsidies-
government-subsidies-and-other-incentives-forinstalling-rooftop-solar-system-in-
india/articleshow/69338706. cms?from=mdr
39
Uttarakhand, Sikkim, Himachal Pradesh, Jammu and Kashmir, Lakshadweep, as of May 2019.

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Reserve Bank has been actively promoting and supporting green finance initiatives through
policy actions. 2015 saw the addition of the small renewable energy industry to its Priority
industry Lending (PSL) program. Under this plan, people are allowed to invest in renewable
energy and businesses in the renewable energy sector40 can get loans up to ` 10 lakh, while
loans up to ` 30 crore (up from ~ 15 crore since September 4, 2020) are available. India declared
in September 2019 that it wanted to generate 450 GW of renewable energy by 2030. The
Reserve Bank of India (RBI) is actively engaged in educating the public, investors, and banks
about the benefits, challenges, and opportunities associated with green finance. In its Annual
Report 2015–16, the RBI referenced the G20 Green Finance Study Group's (GFSG14) findings,
which underscored the need to enhance green finance activities, facilitate cross-border
investments in green bonds, share knowledge on environmental risks, and foster the growth of
local green bond markets.

The report also addresses broader concerns regarding green finance that warrant attention in
the future, such as defining green activities, the role of intellectual property rights in
technological transfer, and banks' assessment of environmental risks. The RBI emphasizes the
urgency of accelerating green finance for sustainable growth and acknowledges the risks posed
by climate change to financial assets in its Report on Trend and Progress of Banking in India
(2018–19).

Recognizing the challenges hindering the growth of green finance, including issues like
"greenwashing" and mismatches between long-term green investments and short-term investor
goals, the RBI stresses the importance of legislative action to support India's green finance
ecosystem and raise awareness through concerted efforts.

In May 2016, the Indian Renewable Energy Development Agency (IREDA) announced plans
to establish India's first green bank, aligning with the government's efforts to promote clean
energy investments. Additionally, the India Infrastructure Finance Corporation Limited

40
Renewable energy comprises of solar energy, biomass energy, wind-based energy, and micro-hydel energy.

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(IIFCL) introduced a credit enhancement scheme to finance viable infrastructure projects with
bond tenors exceeding five years (Jain, 2020).

Moving forward, the development of green finance in India will be evaluated in conjunction
with the level of environmental sustainability awareness across the country.

4.1.2 A huge step forward in the direction of sustainable finance

The Union Minister for finance and corporate affairs- Ms. Nirmala Sitharaman stated on
February 1st, 2022, that it would be issuing sovereign green bonds in order to raise funds for
environmentally friendly infrastructure. The money raised will be utilized used for public
sector initiatives that lower the economy's carbon footprint. India released the first tranche of
its first sovereign green bond, valued at INR 80 billion (or $980 million), on January 25, 2023.
The Indian government revealed on February 9, 2023, that it would be issuing another batch of
sovereign green bonds for INR 80 billion ($968 million).

4.1.3 “Supporting renewable energy, energy efficiency and pollution

control41”

By funding investments in renewable energy and the electrification of transportation

infrastructure, India's sovereign green bonds demonstrate India's dedication to increasing the
output of renewable energy and lowering its carbon footprint. Due to the fact that these
industries accounted for over 41% of India's GHG emissions in 2019 and are projected to
account for two-thirds of emissions by 2050 as the country's economy expands, investments in
these sectors are especially crucial. The proceeds from green bonds earmarked for renewable
energy will go toward developing novel innovations like tidal energy, as well as promoting the
use of tried-and-true renewable energy sources like solar power, wind, and small hydro.
Considering that coal now supplies 55% of India's energy needs, it is crucial to support the
country's energy transformation process. Renewable energy, energy-efficient construction,
green buildings, sustainable water and waste management, climate change adapting,
sustainable land use and resource management, and the preservation of terrestrial and aquatic

41
Farah Imrana Hussain & Helena Dill, India Incorporates Green Bonds into Its Climate Finance
Strategy, (June 12, 2023), available at: https://blogs.worldbank.org/climatechange/india-incorporates-
green-bonds-its-climate-finance

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biodiversity are some of the other project categories that qualify for financing from the
Sovereign Green Bond. The revenues from the sale of bonds will not be used to pay for projects
that include the production, distribution, or extraction of fossil fuels or in which such fuels are
the primary source of energy.

“Narmada Bachao Andolan v. Union of India”42 The Narmada Bachao Andolan Case serves
as an important case law and has set an example that how the Indian Judiciary has balanced
between different environmental concerns and government policy decision. It has represented
the duty of the court to uphold the constitutional rights which directly refers to the Article 21
of the Constitution and the same time recognizing the governments authority in the making of
the policy. Here some of the issues related to water scarcity, tribal welfare and constitutional
rights were navigated and here the judgement clarified the role of the court as protector of the
fundamental rights rather than the policymaker. Here this case also represents the dependency
on the constitutional provisions of the famous case of Kesavananda Bharati which represented
the importance of the administrative autonomy which was demonstrated by the
acknowledgement of the National Commission on Agriculture’s role.“M.C. Mehta vs. Union
of India & Ors (2004)”43 ,The concept of Sustainable development and the concept of strict
adherence are mentioned and followed in the rulings given in this case further to this which
required environmental approval for the mining activities which were being conducted in the
Aravalli hills. All the mining renewals for leases are subject to notifications for environmental
requirements. Mining was made prohibited till the Monitoring committee further analyses and
makes list of recommendations about the specific cases thus creating both kind of short and
long term plans for the restoration of environment which is the responsibility of the Ministry
of Environment and Forests (MOEF). Here Lease revocation is possible for violation, the
situation here was subject to revision following the Monitoring Committee’s report.

4.2 GREEN FINANCE IN INDIA AND THE WAY FORWARD

42
Narmada Bachao Andolan v. Union of India” (2000) 10 SCC 664.

43
MC Mehta V. Union of India. 2009 AIR SCW 3227.

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The Reserve Bank of India has established guidelines for banks and non-bank financial
institutions (NBFCs) to take "green deposits" in light of the government's goal for sustainable
development and the growing desire amongst investors and businesses to have strong
sustainability credentials. The goal is to guarantee that funds are allocated for green buildings,
sustainable water and waste management, clean transportation, energy efficiency, climate
change adaptation, and the preservation of terrestrial and aquatic biodiversity.

44
India is anticipated to witness an increase in creative financing options and green sector
investment prospects as the need for green finance increases.

The ESG category of mutual funds was introduced by the Securities and Exchange Board of
India (SEBI) in March. India's asset management firms can now introduce many ESG funds,
and as the quality of reporting on these metrics increases, investor confidence will rise due to
the enhanced rigor and openness. As the private sector adopts internal carbon pricing and
encourages investment in green technologies and solutions, it is equally critical to watch for
government action on green financing, such as tax breaks for low-carbon technologies, policy
pushes for green financing instruments, etc. Though procedures are still in their infancy, green
finance and other investment forms will eventually acquire standardized definitions and
frameworks for measurement. The ability to compare and choose between funds and companies
will be enhanced by performance and effect assessment transparency. Tighter reporting
standards, enhanced governance, and the use of technology to detect emissions will all work
together to improve and refine a company's green credentials. This will reassure investors and
allay concerns about greenwashing. Increased openness, uniformity, and education regarding
pertinent measures and their influence on financial success are crucial. India, the most
populated nation and the third-largest emitter of CO2, both contributes to and benefits from
this evolution.

While there might not be a magic bullet when it comes to solving social and environmental
problems, green finance must be encouraged to support ethical and sustainable investing
practices and to push businesses to give these problems top priority. Collaborations between
the public and private sectors, advocacy for new policies, and government and academic

44
Saunak Saha, Green finance is gaining traction for net zero transition in India, (June 5, 2023).

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institutions are all required to ensure the successful implementation of cutting-edge green
financing mechanisms and accelerate the shift to a net zero economy by 2070.

CHAPTER V

CONTRASTIVE EXAMINATION
Green Finance is a contemporary issue and there are significant leaps and bounds in terms of
progress by different jurisdictions worldwide. Regulations to implement green finance have
been executed in every continent. Spearheading the movement are the European nations,
collectively under the leadership of EU and the Asian nations of India and China.

On an individual level, corporate entities have been found to engage in higher green financing
activities than ever recorded before. These measures can be chalked up to incentive-based
legislations and regulations of European and Asian nations.

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The combined application of green finance instruments such as green bonds, carbon tax and
the effective enforcement of the principles of ESG have resulted in such higher trends of green
leadership. In fact, there is not only a rivalry but the existence of a race to green leadership
amongst various European and Asian nations.

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The effect of green finance regulations is not restricted to ESG or carbon tax only. Green
equities have progressively attracted higher investment over the past decade. Investors
worldwide have poured in exponentially into green stocks/bonds/equities.

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However, several nations, including China, India and EU have fell behind by significant
margins and are lagging in their obligations with respect to the Paris Agreement. The Paris
Agreement stipulates decrease in average temperature of the Earth by certain degrees by a
corresponding reduction of carbon emissions and carbon-based fossil fuels and a simultaneous
shift to sustainable development. The Sustainable Development Goals (SDGs) of the
signatories to the Agreement have to be met as per the terms of the Agreement and every nation
has to reduce their carbon emission and carbon footprint by a specific time period and restrict
them within the pre-determined thresholds as per the agreement.

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Not unlike the developed nations, India has fallen behind on its Nationally Determined
Contributions (NDCs) under the Paris Agreement. In the period of 2015-30, India would
require about Rs. 162.5 lakh crores to meet its obligations.

The following graph is a quantitative representation of NDCs and other criteria signifying the
level of compliance of the signatories to the Paris Agreement:

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The following is the graph of GHG (greenhouse gases) emissions of nations which are parties
to the Paris Agreement:

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The major jurisdictions, namely China, USA, India and EU are the pioneers in the race to green
leadership. They have al taken various measures towards the achievement of their climate
goals. However, each of these nations have, to some extent, fallen behind on their goals with
respect to reduction of their carbon emissions. The following graph represents the carbon
emissions of these primary jurisdictions as of 2020, China being the highest polluter.

It is, therefore, apparent from the above analysis that even though every giant economy around
the world has made a robust attempt at gaining a competitive edge over others to meet their
Paris Agreement objectives and thereby leading the rest of the world in green energy and
renewable sources of manufacturing and production by employing inter alia green financing
regulations as tools of achieving their sustainable development goals, yet they have fallen short
of their expectations and contractual obligations.

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 CHAPTER VI

6. CONCLUSION AND SUGGESTIONS

Green finance shows a complex and dynamic subject that is critical for directing the global
economy towards sustainable growth. The comparative examination of different countries and
areas demonstrates the various techniques and problems connected with adopting green
financing. However, there is still tremendous room for improving the efficacy and reach of
green financing through more structured comparative evaluations, real policy suggestions, and
a stronger emphasis on innovation, social fairness, and inclusion. The lack of commitment to
strike an effective and pragmatic balance between development and discarding non-renewable
sources of energy like fossil fuels can only be overcome by aggressive incentivization of the
private sector and public sector enterprises. The effectiveness and contemporary application of
the existing means of employing green finance to the diverse range of industries which employ
conventional methods of production need to be re-evaluated and newer and better techniques
with unique implementation procedures need to be invested in for green financing to play a
pivotal role in propelling these nations towards a greener future.

The RBI utilised simulations to determine the pathways for the transmission of climate shocks
to the financial sector, which has revealed that climatic events may result in the loss of capital
stock, affecting consumption and production. The negative impact on inflation may also raise
borrowing rates, exacerbating the initial impact on capital stock. Overall, the paper concludes
that the financial industry must plan for climate-related risks and their possible impact on
financial health.

To speed up India's green transformation, a multifaceted approach is required. The suggestions

include stronger green project criteria to prevent greenwashing, tougher transparency standards
for green finance instruments, and a broader range of green financial products. Incentives like
as tax cuts and subsidies may make green investments more appealing, adopt tax regimes for
cases where the pollution is extreme or threatening while capacity training and technology
leveraging can boost efficiency and monitoring. A strong green finance system in India would

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require public-private partnerships, supporting policies, international engagement, and an
emphasis on social and governance elements in addition to environmental aspects.
The economic sector's operations and commercial strategies must be rebalanced in order to
encourage the green transition process and protect financial stability from the growing
susceptibility of severe climate occurrences, to properly contribute to the country's net-zero
emissions objective, the sector may need to generate more resources and redirect existing
resources.

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