Invest Guide July 2025

Climate change is no longer a distant threat - it's an economic reality. For India, a country deeply dependent on climate-sensitive sectors like agriculture, energy, and manufacturing, the economic risks associated with climate change are enormous.

According to the Asian Development Bank (ADB), India could lose up to 2.5% of its GDP by 2070 if the climate crisis continues unchecked. This is not just a statistic; it's a wake-up call.

As an investor, your decisions have power. They can either reinforce outdated, carbon-heavy systems or help accelerate India's shift toward a resilient, low-carbon economy. The choice is clear: it's time to embrace green finance.

What is Green Finance and Why Does It Matter?

Green finance refers to investments that deliver environmental benefits in the broader context of sustainable development. This includes:

• Renewable energy (solar, wind, hydro)
• Energy-efficient infrastructure
• Clean transportation
• Sustainable agriculture
• Water and waste management systems

Investing in green finance isn't just a trend, it's a necessity. It helps reduce the carbon footprint of your portfolio while supporting India's ambitious climate goals, such as achieving net-zero emissions by 2070.

Climate Change: A direct hit to India's Economy -

Extreme weather events, rising temperatures, floods, and water scarcity are not just humanitarian crises; they are direct blows to India's economic productivity and growth potential.

• According to an article from Forbes India, climate change could shave off significant percentages of India's GDP, reduce job creation, and drive up inequality.
• A report covered by The Economic Times estimates that India is already facing an economic toll of billions due to climate-induced losses.
• The Indian Express highlighted that India has begun to rethink how it approaches the climate crisis, signaling a stronger policy alignment between environmental and economic sustainability.

For investors, this means traditional economic models - those that fail to account for environmental risks may no longer be reliable. Ignoring climate change in your investment strategy is not just environmentally negligent, it's financially unwise.

RBI's Green Finance Initiatives (2024-2025)-

Revised Priority Sector Lending (PSL) Guidelines (Effective April 1, 2025):

The RBI updated its PSL guidelines to enhance credit flow to the renewable energy sector. Key changes include:

• Increasing the loan limit for renewable energy-based power generators and public utilities to ₹35 crore.
• Maintaining the loan limit for individual households at ₹10 lakh per borrower.

Climate Risk Disclosure Framework:

In February 2024, the RBI released a draft framework mandating banks and Non-Banking Financial Companies (NBFCs) to disclose climate-related financial risks. This initiative aims to integrate climate considerations into financial decision-making processes.

Proposal for a Common Pool of Climate Projects:

RBI Governor Sanjay Malhotra proposed the creation of a shared pool of bankable climate-focused projects. This initiative seeks to enhance climate financing by aggregating knowledge and resources, thereby improving project viability and reducing risks.

Introduction of 'On-Tap' Cohort and 'Greenathon':

The RBI announced plans to establish an 'on-tap' cohort on climate change risks and sustainable finance under its Regulatory Sandbox initiative. Additionally, a special event named 'Greenathon' is being prepared to focus on climate change and related challenges.

These measures underscore the RBI's commitment to fostering a sustainable financial ecosystem. Investors and financial institutions are encouraged to align their strategies with these initiatives to contribute to India's green transition.

How you can contribute as an investor:

Here's how you can make a tangible difference:

• Invest in ESG and Green Mutual Funds
  Look for mutual funds that have strong ESG mandates. These funds typically invest in companies with sustainable business practices, reducing long-term risks.
• Support Green Bonds
  These are debt instruments used to fund green projects. They're gaining traction in India and are often backed by government or corporate guarantees, making them a relatively secure investment.
• Ask the Right Questions
  Engage with your financial advisor about the environmental impact of your investments. Ask where your money is going and if it supports climate-aligned sectors.
• Diversify into Sustainable Sectors
  Clean energy, electric mobility, water conservation and waste management are emerging sectors with massive growth potential over the next decade.
• Encourage Businesses to Disclose Climate Risks
  As a shareholder, push for climate-related disclosures and carbon reduction targets from the companies you invest in.

Final Thoughts: The investor's role in a sustainable india

India stands at a critical crossroads. On one side lies a carbon-intensive growth path riddled with risks; on the other, a green and inclusive economy powered by clean energy, resilient infrastructure, and sustainable finance.

As the RBI, government, and global institutions push for a green transition, the role of individual investors and institutions becomes pivotal. By choosing to finance the future, not the past, you contribute not only to your wealth creation but also to the well-being of generations to come.

Let your money reflect your values. Invest in a greener India.