NEW DELHI (India CSR): ICRA ESG Ratings, a SEBI-licensed Category-I ESG Ratings Provider (ERP), is introducing a draft framework for India’s Climate Finance Taxonomy, a step toward aligning financial flows with the nation’s climate ambitions. The taxonomy aims to channel an estimated USD 2.5 trillion, needed to meet India’s climate commitments and support sustainable development. India requires USD 2.5 trillion by 2030 to fulfill its Nationally Determined Contributions (NDCs) under the Paris Agreement.
Guidelines for Mobilization
The taxonomy is designed to mobilize these funds by establishing transparent guidelines for investors and businesses. It includes provisions to support businesses in resource mobilization, mitigate greenhouse gas (GHG) emissions, and promote climate-resilient infrastructure, while preventing greenwashing and advancing the strategic vision of Viksit Bharat by 2047.
Inclusive Hybrid Approach
The draft taxonomy adopts a hybrid approach, combining qualitative and quantitative metrics in a phased manner to ensure inclusivity across sectors, particularly for MSMEs. Key principles of the framework include consistency with national climate action, science-based transparency, prioritization of transition pathways, and support for indigenous technologies. It emphasizes “Do No Significant Harm” safeguards and proportionality for MSMEs to enable broad participation in low-carbon transitions.
Sectoral Focus Areas
The taxonomy identifies focus sectors such as power, mobility, buildings, agriculture, and hard-to-abate industries. For the power sector, it advocates efficiency improvements in thermal plants, renewable capacity expansion, and adoption of nuclear, hydrogen, and storage technologies. In mobility, it supports initiatives like the FAME scheme and ethanol-blended fuels. The framework also highlights climate-resilient agriculture, sustainable construction, and investments in low-emission technologies for hard-to-abate sectors.
Evolving for Accountability
ICRA ESG emphasizes the need for enhanced reporting, stakeholder engagement, and continuous evolution of the taxonomy to address emerging challenges. The draft aligns with India’s NDCs and long-term development goals, aiming to channel climate finance effectively while fostering domestic innovation and accountability.
(India CSR)
