Bridging the Financial and Green Gap for India's Sustainable Future

March 19, 2025. By News Bureau

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Green Gap for India

India is making significant strides toward a carbon-neutral economy with commitments to achieve net-zero emissions by 2070. This journey involves transforming our financial systems, energy infrastructure, and leadership approaches. To that end, the presence of a diverse set of customers, entrepreneurs, and business leaders represent a valuable resource in sustainable development and green finance, with immense potential to further strengthen India's growing green ecosystem.

Financing India's green transition
India's renewable energy targets and clean mobility ambitions demand unprecedented capital mobilization. The International Energy Agency estimates that India needs approximately $160 billion annually to meet its climate objectives; a figure that far exceeds current investment flows.

Specialized green credit vehicles, blended finance models that mitigate technology risks, and retail investment products democratizing access to sustainable assets all show promise. However, their success hinges on thoughtful design that accounts for local market conditions and development priorities. For instance, India suffers from some of the highest levels of ambient air pollution globally. Exposure to such high levels of air pollution has serious consequences for human health, and can be linked to ischemic heart disease, stroke, pneumonia, and lung cancer. Addressing such concerns requires innovative financing mechanisms attuned to India's unique context. Effective policies balance regulatory certainty with flexibility, creating predictable environments for long-term investments while adapting to rapidly evolving technologies.

Policy as the enabler
No financial transformation occurs in a vacuum. Government frameworks fundamentally shape market dynamics in sustainable sectors, particularly emerging fields like e-mobility and renewable energy.

India's production-linked incentives for solar manufacturing, tax benefits for electric vehicle adoption, and renewable purchase obligations exemplify how targeted interventions can catalyze green market development. The PM - Surya Ghar Muft Bijli Yojana aims to install rooftop solar plants in one crore households. As of January 2025, rooftop solar systems have been installed for more than 7 lakh households. Such positive interventions and policy measures, when complemented by robust climate disclosure requirements and standardized ESG frameworks, can guide capital toward sustainability objectives.

The most successful policy ecosystems incorporate diverse perspectives in their design—recognizing that climate solutions must work for varied stakeholders. In this context, encouraging businesses from all strata of the society will prove invaluable when adapting global green finance models to Indian realities. Their input helps ensure that clean energy solutions reach underserved communities, that climate resilience benefits vulnerable populations, and that the transition creates inclusive economic opportunities rather than exacerbating inequalities.

Creating opportunities for diverse leadership
According to the Economic Survey 2024-25, India is the seventh most vulnerable country to climate change. Women's participation in policy formulation helps ensure that measures address intersectional challenges, from energy access in rural communities to green skills development across demographic groups.

With the number of women entrepreneurs increasing, women in finance continue to bring valuable perspectives to the table. At Ecofy, we have built a one-of-its-kind, tech-first, green-only NBFC. We are a digital lending platform offering loans to retail consumers in the space of electric vehicles, rooftop solar panels, and SME financing. With our unique perspective, we partner with people and businesses who want to reduce their carbon footprint and restore balance to the planet.

Reshaping investment through diverse perspectives
The financial sector's approach to climate change is evolving, with environmental, social, and governance (ESG) considerations increasingly driving investment decisions. Yet, despite promising shifts, a significant gap remains between India's green financing needs and available capital. This gap is not only about money but also about perspective.

Research indicates that diverse leadership teams make more balanced decisions when evaluating long-term risks and opportunities. Women leaders often bring nuanced approaches to environmental stewardship, frequently prioritizing sustainable outcomes over short-term gains. This holistic view is precisely what sustainable finance demands, particularly in emerging markets where climate vulnerabilities intersect with development imperatives.

In practice, this translates to investment strategies that look beyond conventional metrics. When women have seats at decision-making tables, investments tend to incorporate broader stakeholder considerations like supporting community-centric renewable projects, circular economy initiatives, and climate adaptation measures that might otherwise be overlooked.

Looking forward
As sustainable mobility expands and clean energy costs continue falling, India stands poised for accelerated progress toward climate goals. New financial mechanisms, from green bonds to carbon markets, are expanding the toolkit available to support this transition. But technology and finance alone cannot drive transformation at the necessary scale and speed.

The human element remains crucial. Diverse leadership brings cognitive variety to problem-solving, enhances stakeholder engagement, and strengthens organizational resilience; all essential qualities for navigating the complex challenges ahead.

For India to realize its sustainable future, the financial sector must embrace women's leadership as a strategic imperative rather than a compliance exercise. This means creating genuine pathways to senior roles, valuing collaborative approaches to decision-making, and recognizing that diverse perspectives are crucial for strengthening financial strategies.

- Dhanashri Rane, Head – Growth Strategy & Investor Relations, Ecofy