The technological developments across the globe have been so mindboggling that what was un-imaginable yesterday is the reality today. Who imagined that space tourism would be a reality? While the new technologies like alternate reality and augmented reality are for sure a boon for the human kingdom, the concern that remains unaddressed is the adverse impact on ecological balance. The firms and individuals should no doubt create the wealth through several project investments but with a caution and concern for sustainability future generations. Hence there is a dire need to act responsibly by shifting the focus from untenable investments to sustainable project financing. Transitioning to investments in sustainable growth-oriented projects is the need of the hour. This implies that the firms must be cognizant of environmental, social and governance (ESG) implications while taking investment decisions. Alarming environmental issues like ozone depletion, pollution of natural resources and extinction of biodiversity warranted European Commission to approve European Green deal that make the member countries become climate neutral by 2050. It is expected that the EU requires to invest closer to 350 billion euros a year till 2030. This scale of investment in sustainable projects looks impractical to the government and public sectors and hence financial sector needs to play a vital role in terms of orienting more funds towards sustainable projects with a long-term perspective in mind. Thus, public private partnership (PPP) should focus more on and finance the projects like green space, water treatment, biofuel, waste recycling etc. It is of course worth noting that there have been significant developments on this front, like that of New York City’s central park, Swachh Bharat Abhiyan (Clean India Mission) in India, COSME projects by EU countries, to name a few.
The sustainable finance is of paramount importance to the countries with highly inadequate land, water and forestry resources. For instance, Singapore introduced Tourism Sustainability Program (TSP) that aims to monitor and reduce carbon emission. The birth of ESG based financing was based on equity as the primary source of funding but spearheaded into debt markets as well. On an aggregate basis, there is an astounding growth in ESG assets across the globe. As per a report by Bloomberg Intelligence, investment in ESG assets crossed $35 trillion in 2020 and is poised to surpass $41 trillion by 2022 and $50 trillion by 2025 which is almost a third of global assets under management. In this direction, green bonds and sustainability linked loans have been picking up the pace significantly across the globe. Initiatives like that of Paris Agreement on climate change and UN Sustainable Development Goals (SDGs) have been spurring the demand for green debt instruments. US and Germany maintain the leading positions as first and second largest issuers of green bonds, China managed to beat France to be the third largest. Many other European and Asian countries need to step up and show the responsibility towards sustainability by mobilizing and investing the funds in sustainable projects. On the utilization front, the data reveals that renewable energy draws the largest share (35%) of green finance followed by buildings (30%) and transport (18%). In the light of increasing trend in wastage, channelizing a meagre 4% of green bond proceeds to waste recycling draws the attention of business, society and government (BSG) and action plan post-haste. The countries with highest per capita wastage need to realize their responsibility towards global sustainability and act upon accordingly. A joint initiative by the UK and India “Climate Finance Leadership Initiative” (CFLI) to support green energy projects through mobilization of private green capital is a welcome step. While the governments must provide enough impetus, the business houses should assume greater social responsibility towards sustainability with a not-for profit motive.
About the Author
Dr. P. Janaki Ramudu is a result-oriented teacher, researcher and able administrator with proven subject expertise and leadership skills in the field of higher education. He has 32 years of teaching and administrative expertise in the field of Higher Education. As an academic and an administrator, he held several key portfolios, including the chairman and member on academic boards of many Universities of repute. He visited countries like UK (London), Singapore, Malaysia, Dubai, Taiwan, Hong Kong and Thailand for various academic assignments including conferences and chairing technical sessions. He won the best paper award in an international conference held at Taiwan. Based on his contribution to the field of teaching and research, he received an exclusive invitation and participated in annual symposia at Imperial College, London.