Global financial reform to support climate action
Senior Indian officials concluded a two-day workshop on sustainable growth, highlighting the necessity of revamping the global financial architecture to support green development and climate transition. The workshop, themed “Sustainable growth agenda for the global economy,” was organized by Niti Aayog as a side event under India’s G20 presidency and brought together 40 experts from India and abroad.
During the workshop, various sessions delved into critical topics such as energy and climate, technology and policy, and reshaping global finance for sustainable growth. The experts unanimously agreed that adequate funding exists for a green transition; however, more focus is needed on improving the channels to attract these funds effectively.
NITI Aayog Vice Chairman, Suman Bery, addressed reporters, asserting that the challenge lies in optimizing the pathways to access funds for green projects. Additionally, there are obstacles related to data and project preparation, which need to be overcome to make them attractive to potential investors.
India’s G20 Sherpa, Amitabh Kant, who also participated in the event, emphasized the urgent need to restructure the global financial architecture to ensure a steady flow of funds to emerging economies. He pointed out that emerging economies are projected to contribute nearly 80% of global economic growth in the coming years. While the share of developed countries in overall GDP growth is declining, developing nations are gaining prominence.
However, Amitabh Kant emphasized that the flow of funding from developed countries to emerging markets must increase. These economies are already grappling with the aftermath of the Covid-19 pandemic, the cost of living crisis, and the deceleration in achieving the Sustainable Development Goals (SDGs).
According to Kant, an estimated $5 trillion is required to finance both climate transition and the implementation of the SDGs. However, embracing a sustainable economy could unlock business opportunities worth around $90 trillion. Surprisingly, the global investment pool, including $150 trillion from pension funds and institutional investors, amounts to a staggering $350 trillion. The challenge, Kant noted, is to de-risk projects so that they become attractive to potential investors.
CEO of Niti Aayog, BVR Subrahmanyam, emphasized that the private sector will play a pivotal role in funding the green transition. As a result, reforming multilateral financial institutions becomes crucial to facilitate the flow of capital. Indian states will also have a substantial responsibility, as most green transition projects in energy and manufacturing will be managed at the state level. Niti Aayog aims to provide key support to states in their efforts.
Regarding potential differences within the G20 concerning the green transition and climate funding, Amitabh Kant asserted that India’s G20 presidency is ambitious and action-oriented. He emphasized that India is not seeking a middle ground but is pushing the boundaries to drive inclusive growth, expedite SDG implementation, and foster green development.
With the conclusion of this workshop, India’s commitment to sustainable growth and climate action remains steadfast, setting an inspiring example for the global community. As the G20 summit approaches, the world awaits to witness concrete actions aimed at reshaping the financial landscape for a greener and more prosperous future.