Green finance
Topic: Environment and Sustainable Development · NCERT: Beyond NCERT
Meaning
Green finance is money directed to projects and activities that help the environment, such as renewable energy, clean transport or water conservation. It covers loans, bonds, deposits and other financial products. It matters because the shift to a low-carbon economy needs very large investment, and public money alone cannot pay for it.
Example
India released a sovereign green bond framework in November 2022 and made its first issue in January 2023. The money raised goes only to eligible green projects. SEBI regulates green debt securities, and RBI issued a green deposit framework in 2023 so that banks can raise deposits for green lending.
Don't confuse with
- Green credit: this is a tradable unit earned for voluntary green actions such as planting trees (Green Credit Rules, 2023). It is not a loan or an investment.
- Sustainability-linked bonds: the money raised can be used for anything. Only the interest rate depends on meeting green targets.
Related concepts
- Linear economy
- Circular economy
- Recycling
- E-waste
- Extended producer responsibility
- Urban mining
- Right to repair
- Porter hypothesis
- Sustainable infrastructure
- Sustainable consumption and production