Author: Anirudh Krishnan
Editor: Soumya Singhal
Abstract
The financial sector is responsible for large-scale investments in the fossil fuel industry. The current global warming and climate change trends demand urgent scrutiny of the sector’s investments. There is a need for the financial sector to invest in projects and companies that adhere to sustainable business practices. In doing so, banking and financial institutions must build on international standards and discourse to suit the Indian context. This issue brief aims to give an overview of the role of the Indian banking sector in the climate crisis while recommending a way forward.
Keywords: Fossil fuel financing, climate crisis, banking, emissions, ESG
Introduction – The Role of The Banking Sector in the Climate Crisis
India faces a severe threat from the ongoing climate crisis. With the current global temperatures being 1.2℃ above pre-industrial levels, the world is moving toward a 3℃ temperature rise. Even if the major economies of the world act urgently to keep the atmospheric temperature increase to 1.5℃, as outlined under the Paris Agreement, India will continue facing its share of climate-related issues. The Intergovernmental Panel on Climate Change [IPCC] concluded that emissions from fossil fuels are one of the major causes of global warming and climate change. In 2018, 89% of global carbon dioxide emissions came from fossil fuels and related industrial activities (ClientEarth Communications, 2022).
