Green Finance: A Path to Sustainability

Introduction

The COVID-19 pandemic in 2020 caused countless damage to the world's finances, humanity, and the planet in addition to financial institutions (Seale and Mirza,2020), which had a range of effects like fluctuations in markets, depreciating assets, and difficulties with company financing (Li et al., 2023). Environmental conservation has grown even more important in the face of the pandemic (Lu et al., 2022). Greenhouse gas emissions, primarily from fossil fuels and nonrenewable energy sources, are to blame for the majority of ecological issues. These emissions cause socioeconomic hazards as well as health problems (Masri et al., 2021). Accordingly, it is necessary to take the required long-term steps to implement green policies and frameworks to sustain future growth. Among the most important measures adopted to stop environmental deterioration are the adoption of green banking and financing. According to Falcone (2020), “green finance” refers to the actions and investment decisions that banks and other financial institutions take to support a sustainable economy. People are more aware of the necessity of a healthy ecological environment for human survival, and as a result, there is broad support for green financing and peaceful cohabitation of humans and nature. The idea of “green finance” can significantly contribute to achieving the SDGs, particularly objectives 11, 12, and 13. Green finance is more specifically the allocation of capital and financial system investments in environmentally friendly or ecological projects (Mehta et al., 2023). The increasing popularity of green finance has drawn interest from many nations and regions. It was also highly publicized and discussed at the G-20 nation’s summit. According to Akomea-Frimpong et al. (2022), “green finance” is also known as “sustainable finance,” “environmental finance,” “climate finance,” and “green investment.” Furthermore, poor nations are at a turning point since they are more vulnerable to climate change and rely heavily on existing global climate funds for funding their programs for climate protection and mitigation. With enormous opportunities for capital, expansion, and financial dominance in the years to come, India is viewed as among the world's upcoming emerging nations. The environmental implications of rising temperatures, however, are proving to be a challenge for emerging economies like India. For example, it's believed that elevated sea levels have rendered India among the countries most vulnerable to climate change, which has led to the deterioration of biological diversity and worsening financial challenges for the populace. They have therefore implemented several strategies to decrease the risks and damaging consequences of environmental change on the ecology. This includes promoting sustainable development and stopping the destruction of the environment through structured, managed green finance consistent with global norms. Campiglio et al. (2018) also stated that green banking or green finance is one of the key components of sustainable economic development in a country like India. Green finance is an integral means of finance for any nation's sustainable economic development. In light of this, it can be claimed that green financing is crucial to any nation's efforts to combat climate change and achieve the Sustainable Development Goals (SDGs).