SLIDE 1: TITLE SLIDE

Welcome to the Foundation Course on ‘Climate Risk and Sustainable Finance.

There are two Modules in this Foundation Course.

The better we understand the risks and challenges of climate change the better positioned we will be to
act together and address the enormous challenges we face. As the global community, governments, and
private sector work to deliver on the promise of the historic Paris agreement, financial markets around
the world are beginning to integrate climate transition risks and opportunities into investment decision
making.

Module one will introduce you to the basics of climate change - from growing and well-documented
climate change science and governance.

Module one will also provide an overview of climate change in the India context.

SLIDE 2: CONTENT OUTLINE

This Module has 5 Sections and will introduce you to a global and region-specific understanding of
challenges on what sustainable finance actions are needed to reduce emissions.

The module will be followed by a repository of knowledge resources and a knowledge assessment.

The five sections are:

Section 1: Introduction to Climate Change

Section 2: Sustainable Development

Section 3: Sustainability and Finance

Section 4: International Governance for Climate Change

Section 5: Climate Change – The Indian Context

SLIDE 3: LEARNING OBJECTIVES

After completing this Module, you will be able to:

- Understand the basic concepts of climate change and sustainable development

- Explain the role of finance in achieving the Sustainable Development Goals and the goals of the
Paris Agreement on climate change.

- Identify the type of ecosystems, international agreements, and policies related to climate
finance
 - Relate global finance trends to the climate finance sector in India

SLIDE 4: SECTION 1 – INTRODUCTION TO CLIMATE CHANGE

Let us now begin with Section 1 - Introduction to climate change

In this this section, you will learn about the science of climate change, the risks it poses, its impact on
people and planet and the need for urgent climate action.

Slide 5: CLIMATE CHANGE

Climate change refers to long-term shifts in temperatures and weather patterns.

These shifts may be natural, such as through variations in the solar cycle. But since the 1800s, human
activities have been the main driver of climate change, primarily due to burning fossil fuels like coal, oil
and gas. Burning fossil fuels generates greenhouse gas emissions that act like a blanket wrapped around
the Earth, trapping the sun’s heat and raising temperatures.

The consequences of climate change now include, among others, intense droughts, water scarcity,
severe fires, rising sea levels, flooding, melting polar ice, catastrophic storms and declining biodiversity.

Climate change can affect our health, ability to grow food, housing, safety and work. Some of us are
already more vulnerable to climate impacts, such as people living in small island nations and other
developing countries. Conditions like sea-level rise and saltwater intrusion have advanced to the point
where whole communities have had to relocate, and protracted droughts are putting people at risk of
famine.

Slide 6: EVIDENCE ON CLIMATE CHANGE

We are going to talk about the compelling, growing, and well-documented evidence for the rapid
climate change. We have scientific information that shows the signs of a changing climate.

From global temperature rise to melting ice sheets, the evidence of a warming planet is clear as we can
see it from the examples in this slide.

Global Temperature is Rising: The planet's average surface temperature has risen about 1 degree Celsius
since the late 19th century, a change driven largely by increased carbon dioxide emissions into the
atmosphere and other human activities. This is known as Global Warming, and we will discuss it more in
this section. Most of the warming has occurred in the past 40 years, with the past nine years being the
warmest years since modern recordkeeping began in 1880.

The Ocean Is Getting Warmer: The ocean has absorbed much of this increased heat, with the top 100
meters of ocean showing warming of more than 0.33 degrees Celsius since 1969.

Glacial Decline: We also have the proof that the Ice Sheets Are Shrinking and Glaciers are retreating
almost everywhere around the world — including in the Alps, Himalayas, Andes, Rockies, Alaska, and
Africa. The Greenland and Antarctic ice sheets have decreased in mass. Data from NASA's Gravity
Recovery and Climate Experiment, we can tell that Greenland lost an average of 279 billion tons of ice
per year between 1993 and 2019, while Antarctica lost about 148 billion tons of ice per year.

Satellite observations reveal that the amount of spring snow cover in the Northern Hemisphere has
decreased over the past five decades and the snow is melting earlier.

Sea Level Is Rising: The Global Sea level rose about 8 inches in the last century. The rate in the last two
decades, however, is nearly double that of the last century and accelerating slightly every year.

Arctic Sea Ice Is Declining: Both the extent and thickness of Arctic Sea ice has declined rapidly over the
last several decades.

Extreme Events Are Increasing in Frequency: The number of record high temperature events in the
United States has been increasing, while the number of record low temperature events has been
decreasing, since 1950. You will see some examples from South Asia of these events later in this section.

Ocean Acidification Is Increasing: Since the beginning of the Industrial Revolution, the acidity of surface
ocean waters has increased by about 30%. This increase is due to humans emitting more carbon dioxide
into the atmosphere and hence more being absorbed into the ocean. The ocean has absorbed between
20% and 30% of total anthropogenic carbon dioxide emissions in recent decades

Slide 7: GLOBAL WARMING

Let us now understand the concept of Global Warming that was mentioned earlier.

Global warming refers to the rise in global temperatures due mainly to the increasing concentrations of
greenhouse gases (or GHG) in the atmosphere. Greenhouse gases are gases in the earth's atmosphere
that trap heat.

Since the pre-industrial period, human activities are estimated to have increased Earth’s global average
temperature by about 1 degree Celsius, a number that is currently increasing by more than 0.2 degrees
Celsius per decade.

It is important to note that Global warming is just one aspect of climate change and is not
interchangeable with the term "climate change”. It also does not mean that temperatures rise
everywhere at every time by same rate. Temperatures might rise 5 degrees in one region and drop 2
degrees in another. For instance, exceptionally cold winters in one place might be balanced by
extremely warm winters in another part of the world

The graph on the right illustrates the change in global surface temperature relative to 1951-1980
average temperatures.

Most recent analysis from NASA confirms that the Earth's average surface temperature in twenty
twenty three was the warmest on record since recordkeeping began in eighteen eighty. Continuing the
planet's long-term warming trend, Earth was about two point four five degrees Fahrenheit or about one
point three six degrees Celsius warmer in twenty twenty three than in the late nineteenth century pre-
industrial average.
Slide 8: GLOBAL WARMING AND THE GREENHOUSE EFFECT

This slide will help you understand the Earth's "greenhouse effect."

The Earth absorbs some of the energy it receives from the sun and radiates the rest back toward space.
However, certain gases in the atmosphere, called greenhouse gases, absorb some of the energy radiated
from the Earth and trap it in the atmosphere. These gases essentially act as a blanket, making the
Earth’s surface warmer than it otherwise would be. Some of the primary greenhouse gases in Earth's
atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, hydrochlorofluorocarbons,
hydrofluorocarbons and ozone.

Greenhouse gases absorb this infrared radiation and trap its heat in the atmosphere, creating a
greenhouse effect that results in global warming and climate change.

Many gases exhibit these greenhouse properties. Some gases occur naturally and are also produced by
human activities.

Some, such as industrial gases, are exclusively human made.

Slide 9: EXAMPLES OF EXTREME EVENTS

Extreme events are occurrences of unusually severe weather or climate conditions that can cause
devastating impacts on communities and agricultural and natural ecosystems.

Weather-related extreme events are often short-lived and include heat waves, freezes, heavy
downpours, tornadoes, tropical cyclones and floods.

Climate-related extreme events either persist longer than weather events or emerge from the
accumulation of weather or climate events that persist over a longer period of time. Examples include
drought resulting from long periods of below-normal precipitation or wildfire outbreaks when a
prolonged dry, warm period follows an abnormally wet and productive growing season.

Extreme Events have become commonplace around the world, especially in the last decade.

The 2022 heat wave in India, Excessive rainfall and flooding in Nepal in October 2021 and the 2020,
Cyclone Amphan took the lives of 26 people in Bangladesh are all examples in the South Asia region, of
such extreme events.

Slide 10: GLOBAL EMISSIONS HAVE BEEN INCREASING, MAINLY DUE TO ENERGY PRODUCTION

This chart shows the breakdown of total greenhouse gases, the sum of all greenhouse gases, measured
in tonnes of carbon dioxide equivalents. The distribution of Green House Gas emissions across sectors is
an important consideration for policymaking.

Green House Gas Emissions can be split into five major economic sectors: energy supply, industry,
agriculture and Land Use; Land Use Change and Forestry, transport and buildings.

Globally, Fossil carbon dioxide emissions is the main contributor to the overall increase in Green House
Gas emissions.
In twenty twenty two, energy supply was the largest source of emissions at thirty six percent of the
total, mainly due to combustion emissions in the power sector and emissions from fossil fuel
production. Industry still dominates among other sectors at twenty five percent of the total followed by
agriculture and Land Use; Land Use Change and Forestry at eighteen percent, transport at fourteen
percent and buildings at six point seven percent.

However, it is to be noted that, overall, net electricity demand growth in twenty twenty two was
primarily met by renewable sources excluding hydropower, driven by a record increase in solar capacity
additions.

Slide 11: WHO EMITS MORE (TOTAL) IN THE WORLD?

This slide shows the overall greenhouse gas emissions in twenty twenty one and the trend since two
thousand, including inventory based that is including land use change and forestry.

Eight major emitters seven Group of Twenty members and international transport contributed more
than sixty five percent of total global Green House Gas emissions in twenty twenty one. These seven are
China, the United States of America, India, the European Union, the Russian Federation, Brazil and
Indonesia.

The Group of Twenty as a whole contributed seventy six per cent of the total.

Collectively, the emissions of the top eight was thirty three gigatonnes of carbon dioxide equivalent in
twenty twenty one against thirty one point five gigatonnes of carbon dioxide equivalent in twenty
twenty which reflects an increase of four point seven per cent.

Slide 12: WHO EMITS MORE (PER CAPITA) IN THE WORLD?

In this slide, you can see the trends in the per capita greenhouse gas emissions from two thousand to
twenty twenty one.

The world average greenhouse gas emission per capita was six point five tonnes of carbon dioxide
equivalent in twenty twenty one.

Per capita greenhouse gas emissions of the United States of America and the European Union have
continued to decline over the past decade, while those of most other regions grew.
Per capita Green House Gas emissions are more than double the world average of six point five tons of
carbon dioxide equivalent in the Russian Federation and the United States of America, while those in
India remain under half of it. Per capita emissions are fairly similar in Brazil, the European Union and
Indonesia, and at levels slightly below the Group of Twenty average of seven point nine tons of carbon
dioxide equivalent. On an average, least developed countries emit two point two tons of carbon dioxide
equivalent per capita annually.

Slide 13 : IMPACT OF CLIMATE CHANGE

Data shows that while countries are bending the curve of global greenhouse gas emissions downward,
but these efforts remain insufficient to limit global temperature rise to 1.5 degrees Celsius by the end of
the century, which is needed to avoid the worst impacts of climate change, including more frequent and
severe droughts, heatwaves and rainfall.

This 1.5 degrees Celsius goal is the aspirational temperature threshold ascribed in the landmark 2015
Paris Agreement. We will discuss the Paris Agreement in detail later in this module

This is recognized as a crucial global target because beyond this level, so-called tipping points become
more likely. These are thresholds at which small changes can lead to dramatic shifts in Earth’s entire life
support system.

Slide 14: THE DIFFERENCE BETWEEN 1.5 AND 2 DEGREES OF GLOBAL WARMING?

Let us discuss what is the difference between 1.5 and 2 degrees of global warming.

A difference of half a degree celsius might not mean much to someone sitting in the sun or adjusting the
heating in their home. But in terms of how much warming we are subjecting the planet to, it could mean
many millions more people are subjected to life-threatening climate events.

If average global temperatures reach 1.5 degree Celsius above pre-industrial levels, we can expect the
Arctic ocean to have one ice-free summer every 100 years. But if warming rises to 2C, ice-free summers
in the Arctic could happen every 10 years.

The IPCC’s Special Report on Global Warming of 1.5°C, released in 2018, warned that allowing the planet
to warm by more than 1.5°C above pre-industrial levels would have grave consequences. The
infographic on the right shows that the impacts amplify rapidly between just 1.5°C and 2°C of
temperature increase

Slide 15: WE NEED TO ACT URGENTLY

Now that we understand the impact of climate change on the planet, let us see what trajectory is the
world currently on and what does the future of our carbon dioxide and greenhouse gas emissions look
like?

In this visualization you can see five potential future scenarios of global greenhouse gas emissions

1. No climate policies: this shows the projected future emissions if no climate policies were
implemented. It would result in an estimated 4.1 to 4.8°C warming by twenty one hundred.
2. Current climate policies: this shows projected warming of 2.8 to 3.2°C by 2100 based on current
implemented climate policies
3. National pledges shows the scenario if all countries achieve their current targets/pledges set
within the Paris climate agreement. In this case it is estimated that average warming by 2100
will be 2.5 to 2.8°C. This will go well beyond the overall target of the Paris Agreement to keep
warming “well below 2°C”.
4. 2°C consistent: there are a range of emissions pathways that would be compatible with limiting
average warming to 2°C by 2100. This would require a significant increase in ambition of the
current pledges within the Paris Agreement.
 5. 1.5°C consistent: there are a range of emissions pathways that would be compatible with
limiting average warming to 1.5°C by 2100. However, all would require a very urgent and rapid
reduction in global greenhouse gas emissions.

Slide 16: CLIMATE CHANGE IS A MAJOR GLOBAL RISK

Climate related risks are increasingly being recognized as key risks globally. Clearly understanding the
way in which climate change can affect business is vital for proactive strategy and risk management for
financial institutions.

The World Economic Forum stated in its Global Risk Report twenty twenty four that “extreme weather
events” is the second most severe risk that the world needs to be prepared for in the next two years.
This Report explores some of the most severe risks we may face over the next decade.

Over the next ten years, failure to mitigate extreme weather events and critical changes to earth
systems are the two most severe risks facing the world. Four of the top ten most severe risks relate
directly to climate change. The most cited long term risks included extreme weather, critical change to
earth system, biodiversity loss, and shortage of natural resources.

This further underlines the importance to urgency necessary to address the risks posed by climate
change and environmental degradation.

Slide 17: CLIMATE CHANGE: HIGH PRIORITY AGENDA

As you now know that Climate change poses an urgent threat demanding decisive action. Communities
around the world are already experiencing increased climate impacts, from droughts to floods to rising
seas.

The World Economic Forum's Global Risks Report continues to rank these environmental threats at the
top of the list.

Tackling climate change is top priority for policy makers and regulators globally and in India as reflected
in this slide.

Slide 18: Test your knowledge: section 1

Let us now review your understanding of this Section. Answer the questions to the best of your
knowledge and understanding and click Submit.

Slide 19: Question 1

What is “Global Warming”?

1. Global warming refers to the rise in global temperatures due mainly to the increasing
concentrations of greenhouse gases (GHG) in the atmosphere.
2. Global warming refers to the increasing changes in the measures of climate over a long period of
time – including precipitation, temperature, and wind patterns.
3. Global warming refers specifically to the depletion of ozone layer and the melting of the polar
ice caps.
 4. Global warming refers to the rise in water levels, due to the warming of the oceans.
Correct Answer is 1:
Global warming refers to the rise in global temperatures due mainly to the increasing
concentrations of greenhouse gases (GHG) in the atmosphere.

Slide 20: Question 2

What would be the effects of climate change on the planet, if as a result of global warming we exceed
1.5 or 2 degrees - with respect to pre-industrial levels?
1. The risks to our climate of a rise in global temperatures of 2C over pre-industrial levels could
make life easy for millions of people.
2. Limiting global warming to 1.5C could, for example, reduce the number of people who will
experience water stress by 50%.
3. Ice-free summers will be increasingly common (once in 10 years) in the Arctic Ocean if average
global warming reaches 1.5C.
4. There will be no impact on the climate
Correct Answer is 2
Many small island developing states could experience lower water stress as a result of projected
changes in aridity when global warming is limited to 1.5°C.
Note: The 2015 Paris Agreement commits countries to limit the global average temperature rise
to well below 2°C above pre-industrial levels, and to aim for 1.5°C.

Slide 21: Question 3

With reference to the rise in per capita GHG emissions by Countries (since 2000 to present day), which
of the following statements is correct.?
Please select the most Correct Answer(s).
1. Per capita GHG emissions of the United States of America and the European Union have
continued to decline over the past decade, while those of most other regions grew.
2. Per capita GHG emissions of the United States of America and the European Union have
continued to increase over the past decade, while those of most other regions reduced.
3. India remains far higher than the world average at 2.4 tonnes of carbon dioxide equivalent.
4. China has the lowest CO2 emissions per capita in the world
Correct Answer is 1
World average per capita GHG emission was 6.5 tCO2e (tonne of CO2 equivalent) in 2021. On
average, least developed countries emit 2.2 tCO2e per capita annually. Per capita GHG
emissions of the United States of America and the European Union have continued to decline
over the past decade, while those of most other regions grew. India remains far below the world
average around 2.4 tCO2e.

Slide 22: Section 2 – SUSTAINABLE DEVELOPMENT

Let us now move to Section 2 of this Module.

In this section we will discuss the concept of the sustainable development, sustainable development
goals and the interlinkages between climate change and sustainable development
Slide 23: SUSTAINABLE DEVELOPMENT

In 1987, the World Commission on Environment and Development published a report entitled “Our
common future”.

This document came to be known as the “Brundtland Report” after the Commission's chairwoman, Gro
Harlem Brundtland. It developed guiding principles for sustainable development as it is generally
understood today.

The Report stated that critical global environmental problems were primarily the result of the enormous
poverty of the South and the non-sustainable patterns of consumption and production in the North. It
called for a strategy that united development and the environment – described by the now-common
term “sustainable development”.

It defined Sustainable development as development that meets the needs of the present without
compromising the ability of future generations to meet their own needs. Sustainable development calls
for concerted efforts towards building an inclusive, sustainable and resilient future for people and
planet.

For sustainable development to be achieved, it is crucial to harmonize three core elements: economic
growth, social inclusion and environmental protection. These elements are interconnected, and all are
crucial for the well-being of individuals and societies.

Eradicating poverty in all its forms and dimensions is an indispensable requirement for sustainable
development. To this end, there must be promotion of sustainable, inclusive and equitable economic
growth, creating greater opportunities for all, reducing inequalities, raising basic standards of living,
fostering equitable social development and inclusion, and promoting integrated and sustainable
management of natural resources and ecosystems

Slide 24: SUSTAINABLE DEVELOPMENT GOALS (SDGs)

The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015,
provides a shared blueprint for peace and prosperity for people and the planet, now and into the future.

At its heart are the 17 Sustainable Development Goals, which are an urgent call for action by all
countries - developed and developing - in a global partnership.

The 17 Sustainable Development Goals are: no poverty; zero hunger; good health and well-being;
quality education; gender equality; clean water and sanitation; affordable and clean energy; decent
work and economic growth; industry, innovation and infrastructure; reduced inequalities; sustainable
cities and communities; responsible consumption and production; climate action; life below water; life
on land; peace, justice, and strong institutions; and partnerships for the goals

The Sustainable Development Goals are a collection of 17 interlinked objectives designed to serve as a
"shared blueprint for peace and prosperity for people and the planet now and into the future"

The Sustainable Development Goals (SDGs) offer both challenges and opportunities for development.
Global challenges – ranging from climate, water and food crises, to poverty, conflict and inequality – are
in need of solutions that the private sector can deliver, representing a large and growing market for
business innovation

Slide 25: THE SDGs RESPOND TO ECONOMIC, SOCIAL AND ENVIRONMENTAL DEVELOPMENT

These 17 goals are integrated and recognize that action in one area will affect outcomes in others, and
that development must balance social, economic and environmental sustainability.

They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that
improve health and education, reduce inequality, and spur economic growth – all while tackling climate
change and working to preserve our oceans and forests.

More important than ever, the goals provide a critical framework for COVID-19 recovery.

Slide 26: SUSTAINABLE DEVELOPMENT AND CLIMATE CHANGE

What is the relationship between sustainable development and climate change.

On the one hand, climate change influences key natural and human living conditions and thereby also
the basis for social and economic development. On the other hand, society’s priorities on sustainable
development influence the Greenhouse gas emissions that are causing climate change and the
vulnerability.

The graphic on the slide highlights that sustainable development measures and climate-change policies,
including adaptation, can reinforce each other.

Tackling climate change and fostering sustainable development are two mutually reinforcing sides of the
same coin - sustainable development cannot be achieved without climate actions. Conversely, many of
the Sustainable Development Goals are addressing the core drivers of climate change.

Slide 27: SDGs AND CLIMATE CHANGE

We now have understood why climate change presents the single biggest threat to sustainable
development everywhere and its widespread.

Taking urgent action to combat climate change and its devastating impacts is key to seventeen
sustainable development goals. These Goals are defined in a list of 169 Targets and progress towards
these Targets is agreed to be tracked by two hundred thirty one unique Indicators.

Sustainable Development Goal 13 is about climate action. It has five targets which are to be achieved by
2030. They cover a wide range of issues surrounding climate action.

The first three targets are "output targets": Strengthen resilience and adaptive capacity to climate-
related disasters; integrate climate change measures into policies and planning; build knowledge and
capacity to meet climate change.
The remaining two targets are "means of achieving" targets: To implement the UN Framework
Convention on Climate Change, and to promote mechanisms to raise capacity for planning and
management. Along with each target, there are “indicators” that provide a method to review the overall
progress of each target, along with SDG 13 as a whole.

Synergies between SDGs and climate can be found across all 17 goals. For example, SDG 11 –
Sustainable Cities and Communities; SDG 14 - Life Below Water, and SDG 15 - Life on Land.

Slide 28: Test your knowledge: section 2

- Let us now review your understanding of this Section. Answer the questions to the best of your
knowledge and understanding and click Submit.
- The voice over text for question – they should read out the question, the options. Once participants
selects an answer and submits, the system should tell if its correct or not and then read out the text that
we have provided for each answer.
- This is not an evaluation- it is just a break after every section for participants to test their
understanding of the topic

Slide 29: Question 1

What are the core elements to achieve sustainable development?
Please select the most correct answer

1. Economic growth, social inclusion, and environmental protection

2. Gender quality, and environmental protection
3. Social inclusion, and economic growth
4. Environmental Protection
Correct Answer is 1
Sustainable development calls for concerted efforts towards building an inclusive, sustainable
and resilient future for people and planet. For sustainable development to be achieved, it is
crucial to harmonize three core elements: economic growth, social inclusion and environmental
protection. These elements are interconnected, and all are crucial for the well-being of
individuals and societies.

Slide 30: Question 2

Which statement about sustainable development and climate change is wrong?

1. Climate change is already impacting public health, food and water security, migration, peace
and security. Left unchecked, it will roll back the development gains made over the last decades
and will make further gains impossible.
2. Investments in sustainable development will help address climate change by reducing GHG
emissions and building climate resilience.
3. Tackling climate change and fostering sustainable development are not related to each other;
sustainable development can be achieved without climate action.
4. Sustainable development calls for concerted efforts towards building an inclusive, sustainable
and resilient future for people and planet. For sustainable development to be achieved, it is
 crucial to harmonize three core elements: economic growth, social inclusion and environmental
protection.
Correct Answer is 3
Tackling climate change and fostering sustainable development are two mutually reinforcing
sides of the same coin

Slide 31: Question 3

Which of these is NOT a Sustainable Development Goal targeted to be achieved by 2030?

1. Zero Hunger
2. Climate action
3. Sustainable Cities and Communities
4. Space Research
Correct Answer is 4
The SDGs are the blueprint to achieve a better and more sustainable future for all. They address
the global challenges we face, including poverty, inequality, climate change, environmental
degradation, peace and justice.

Slide 32: Question 4

What do we call as meeting the needs of the present without compromising the ability of future
generations to meet their own needs?

1. Resource Optimization
2. Sustainable Development
3. Energy Conservation
4. Reduced Consumption
Correct Answer is 2
Sustainable development is defined as development that meets the needs of the present
without compromising the ability of future generations to meet their own needs. Sustainable
development calls for concerted efforts towards building an inclusive, sustainable and resilient
future for people and planet

Slide 33: Section 3 - SUSTAINABILITY AND FINANCE

Having learned about different aspects of sustainable development and climate change in the previous
sections, it is clear that creating a more sustainable future requires an all-hands-on-deck approach.

This section will help you understand the role of finance as a key lever to influence sustainable
outcomes and in allocating investment to sustainable development.

Slide 34: TWO WAYS TO FIGHT CLIMATE CHANGE

Responding to climate change involves two possible approaches: Mitigation and adaptation.

Climate Change Mitigation refers to efforts to reduce or prevent emission of GHGs, in order to reduce
and stabilize the levels of heat-trapping greenhouse gases in the atmosphere. It can be using new
technologies and renewable energies, making older equipment more energy efficient, or changing
management practices or consumer behavior.
Climate Change Adaptation refers to actions that reduce the negative impact of climate change, while
taking advantage of potential new opportunities. It involves adjusting policies and actions because of
observed or expected changes in climate.

Climate finance is needed for mitigation, because large-scale investments are required to significantly
reduce emissions.

Climate finance is equally important for adaptation, as significant financial resources are needed to
adapt to the adverse effects and reduce the impacts of a changing climate.

Slide 35: SUSTAINABLE, GREEN AND CLIMATE FINANCE

Finance is critical to address the consequences of climate change, and transition towards a more
sustainable form of the economy.

The terms ‘green finance’, ‘sustainable finance’, ‘climate finance’ and ‘low carbon finance’ relate to an
overlapping territory of issues, applied to financial decision-making and flows. It is important for us to
understand the areas of convergence, differences and distinction between them as they are different
terms with different scopes.

“Climate finance” is a subset of green finance, and it refers to local, national or transnational financing—
drawn from public, private and alternative sources of financing—that seeks to support mitigation and
adaptation actions that will address climate change.

A few examples of Climate Finance include Renewable Energy, Energy Efficiency, Desalination, flood-
resilient housing, and drought-resilient crops.

‘Green finance’ is generally used to convey something broader than climate finance, in that it addresses
other environmental objectives and risks. It tends to be understood with a greater focus on greening
broad flows of private investment rather than mainly concerning public and public-leveraged financial
flows.

Green Finance includes what is covered under Climate finance PLUS other projects with environmental
benefits such as air pollution abatement, particle emission reduction, land reclamation, integrated pest
management, hazardous waste collection and handling, sanitation projects, etc.

“Sustainable finance” is an evolution of green finance, as it takes into consideration environmental,

social and governance issues and risks, with the aim of increasing long-term investments in sustainable
economic activities and projects.

Examples of Sustainable Finance include all these plus social projects like MSME loans with financial
inclusion impact, finance for women business activities, finance for marginal groups, supply chain
development with informal economy stakeholders, social housing, etc.

Although the terms are not always used consistently, in general a distinction can be drawn between
approaches to sustainable finance that take a broad environmental, social, economic and governance
approach, and those that take a narrower, ‘green finance’ one concerned only with environmental
issues. Even more narrowly focused are those targeted only on climate change mitigation and/or
adapting to climate change impacts.

All these issues overlap and interrelate to each other. For example, climate change has impacts on social
development, while governance issues can include the extent to which environmental risks are
incorporated by investee companies. Nevertheless, the categories provide a useful simplified scheme for
identifying what areas are included in the scope of different terms.

Slide 36: Test your knowledge: section 3

- Let us now review your understanding of this Section. Answer the questions to the best of your
knowledge and understanding and click Submit.
- The voice over text for question – they should read out the question, the options. Once participants
selects an answer and submits, the system should tell if its correct or not and then read out the text that
we have provided for each answer.
- This is not an evaluation- it is just a break after every section for participants to test their
understanding of the topic

Slide 37: Question 1

What does ‘Climate change’ refer to?

1. Long-term shifts in temperatures and weather patterns

2. Sudden shifts in weather patterns
3. Excessive rainfall and floods in several countries
4. Increase in storms globally
Correct Answer is 1
Climate change is already impacting public health, food and water security, migration, peace
and security. Left unchecked, it will roll back the development gains made over the last decades

Slide 38: Section 4 - INTERNATIONAL GOVERNANCE FOR CLIMATE CHANGE

Section 4: Introduction to International Governance for Climate Change

In this this section, you will learn about the key international bodies active in the climate change space,
and the relevant developments in Climate finance.

Slide 39: CLIMATE FINANCE GLOBALLY

What are the key developments that have been driving the evolution of climate finance globally?

Climate change is one of the major challenges of our time. Sustainability & Climate change have been
discussed at an international scale starting all the way back in 1988.

However, it was not until 2003 that the financial sector got involved. This began with the Equator
Principles, launched by the World Bank & IFC.
In the 2010s, some key international conferences and agreements on climate change, such as the
Cancun agreements and the COP in Rio, established the green climate fund for countries to financially
contribute towards climate change.

In the following years, networks among financial institutions were formed, such as the Sustainable
Banking and Finance Network and Natural Capital Finance Alliance.

After the Paris agreement in 2015, networks and initiatives in the finance sector accelerated
considerably. The conferences since then have included climate finance as key areas of interest, and
global and national level regulations about climate disclosures and sustainability reporting have gained
momentum. In recent years, topics such as climate risk and investment principles have been the main
focus of climate finance.

Several of these international bodies and networks are discussed in greater detail in the following slides.

Slide 40: HOW IS CLIMATE CHANGE GOVERNED?

This is a visual structure showcasing the relationship among key international bodies and intuitions,
which are playing a leadership role in the Climate Finance space.

We will discuss the roles of UNFCCC, IPCC and COP in greater detail in the next few slides.

Slide 41: UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE (UNFCCC)

The United Nations Framework Convention on Climate Change (UNFCCC) established an international
environmental treaty to combat "dangerous human interference with the climate system", in part by
stabilizing greenhouse gas concentrations in the atmosphere.

The UNFCCC secretariat is the United Nations entity tasked with supporting the global response to the
threat of climate change. The Convention has near universal membership and is the parent treaty of the
2015 Paris Agreement and the also the 1997 Kyoto Protocol.

The ultimate objective of all three agreements under the UNFCCC is to stabilize greenhouse gas
concentrations in the atmosphere at a level that will prevent dangerous human interference with the
climate system, in a time frame that allows ecosystems to adapt naturally and enables sustainable
development.

Slide 42: INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE (IPCC)

Now let’s move to INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE. The IPCC is the most important
source of scientific, technical and socioeconomic information on climate change for UNFCCC. Its
objective of the IPCC is to provide governments at all levels with scientific information that they can use
to develop climate policies. The IPCC currently has 195 members.

The IPCC prepares comprehensive Assessment Reports about the state of scientific, technical and socio-
economic knowledge on climate change, its impacts and future risks, and options for reducing the rate
at which climate change is taking place. IPCC reports are also a key input into international climate
change negotiations.
The key findings from the latest 6th Assessment Report (2021-22) clearly highlight that climate impacts
are already more widespread and severe than expected.

Slide 43: CONFERENCE OF THE PARTIES (COP)

Conference of Parties is the main decision-making body of the UNFCCC. It includes representatives of all
the countries that are signatories (or 'Parties') to the UNFCCC.

COP assesses the effects of measures introduced by the Parties to limit climate change against the
overall goal of the UNFCCC.

An essential task for the COP is to review the national communications and emission inventories
submitted by Parties. Based on this information, the COP assesses the effects of the measures taken by
Parties and the progress made in achieving the ultimate objective of the Convention.

The first COP meeting was held in Berlin, Germany in March 1995. The COP Presidency rotates among
the five recognized UN regions - that is, Africa, Asia, Latin America and the Caribbean, Central and
Eastern Europe and Western Europe and Others. There is also a tendency for the venue of the COP to
also shift among these groups.

We will learn about the goals and outcomes, discussed in the latest two COPs – COP 27 in Egypt and
Conference Of the Parties twenty eight in United Arab Emirates, in the upcoming slides.

Slide 44: THE PARIS AGREEMENT - 2015 (1/3)

Let us now understand the landmark Paris Agreement.

The Paris Agreement is a landmark in the multilateral climate change process because, for the first time,
a binding agreement brings all nations into a common cause to undertake ambitious efforts to combat
climate change and adapt to its effects.

The Paris Agreement provides a framework for financial, technical and capacity building support to

Its goal of limiting global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-
industrial levels.

Slide 45: THE PARIS AGREEMENT - 2015 (2/3)

The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196
Parties at COP 21 in Paris, on the twelfth of December 2015 and entered into force on the fourth of
November 2016.

As of twenty twenty four , one ninety five members of the UNFCCC had ratified the Agreement,
including China and the United States, the countries with the first and second largest CO2 emissions
among UNFCCC members.
All 198 UNFCCC members have signed the Paris Agreement.
As mentioned in the previous slide, its goal is to limit global warming to well below 2, preferably to 1.5
degrees Celsius, compared to pre-industrial levels. Emissions need to be reduced by 45% by 2030 and
reach net zero by 2050.

To achieve this long-term temperature goal, countries aim to reach global peaking of greenhouse gas
emissions as soon as possible to achieve a climate neutral world by mid-century.

We note that by twenty twenty three more than hundred and forty countries have committed to a net
zero emissions target by 2050, and China, the largest emitter by 2060. For example, Japan, Korea,
Canada, and New Zealand have passed laws committing to achieving net zero by 2050 while Ireland,
Chile and Fiji have proposed legislation. The UK also has a legally binding net zero target by 2050.

Slide 46: THE PARIS AGREEMENT - 2015 (3/3)

As mentioned in this slide, as part of the Paris Agreement, countries were to submit their plans for
climate action known as the Nationally Determined Contributions (NDCs).

In their NDCs, countries communicate actions they will take to reduce their Greenhouse Gas emissions
in order to reach the goals of the Paris Agreement. Countries also communicate in the NDCs actions they
will take to build resilience to adapt to the impacts of rising temperatures.

India submitted its Intended NDC to the UNFCCC on 2nd October, 2015 and has updated the same in
twenty twenty two.

With the Paris Agreement, countries established an enhanced transparency framework. Under this
framework, starting in 2024, countries will report transparently on actions taken and progress in climate
change mitigation, adaptation measures and support provided or received. It also provides for
international procedures for the review of the submitted reports. The information gathered through the
enhanced transparency framework will feed into the Global stocktake, which will assess the collective
progress towards the long-term climate goals.

Slide 47: COP 28: DUBAI, UAE - 2023

The Conference Of the Parties twenty eight closed signaling the “beginning of the end” of the fossil fuel
era.

Let us now learn about the major outcomes of Conference Of the Parties twenty eight across energy
transition and climate finance. Countries agreed to launch and operationalize the Loss and Damage Fund,
hosted by the World Bank for four years, with an initial pledge of US dollar six hundred and fifty five point
nine million towards the Fund from various high and middle income countries.

The parties also adopted the outcome on the first Global Stock Take, an assessment of progress on the
goals of the Paris Agreement, which recognises the need for deep, rapid and sustained reductions in
greenhouse gas emissions in line with one point five degree pathway. Eight measures are adopted to limit
the temperature to one point five degree such as tripling the renewable energy capacity by twenty thirty
; Phase-down of unabated coal power; Accelerating efforts globally towards net zero by around mid
century; Accelerating zero and low emissions technologies such as Nuclear, carbon capture, utilisation
and storage, Hydrogen; Transitioning away from fossil fuels in energy systems; Reducing non-carbon
dioxide emissions such as methane emissions globally by twenty thirty; Emissions reductions from road
transport and Phasing out of inefficient fossil fuel subsidies.

Sixty six national signatories committed to a sixty eight percent reduction in cooling-related emissions by
twenty fifty.

Under climate finance, developed nations owe developing nations US dollar five hundred billion by twenty
twenty five under the New Collective Quantified Goal.
Parties agreed on targets for the Global Goal on Adaptation and its framework to strengthen efforts for
resilience.
Thirteen national governments endorsed the United Arab Emirates Leaders’ Declaration on a Global
Climate Finance Framework. The Framework will work to unlock the investment opportunity of climate
finance.

Twenty countries launched the declaration to Triple nuclear energy by twenty fifty.

Launched the Coal Transition Accelerator, to unlock new sources of public and private financing to
facilitate just transitions from coal to clean energy.

ALTÉRRA was launched at Conference Of the Parties twenty eight with a US dollar thirty billion
commitment from the United Arab Emirates, making it the world’s largest private investment vehicle for
climate change action.

India’s climate initiative actions during Conference Of the Parties twenty eight included launching of
Global River Cities Alliance , Green Credits Initiative, LeadIT two point zero focussing on co development
and transfer of low carbon technology and financial assistance to emerging economies along with push
for progress on the New Collective Quantified Goal, replenishment of Green Climate Fund and provision
of affordable climate finance by Multilateral Development Banks.

Slide 48: COP 27: SHARM EL-SHEIKH, EGYPT - 2022

What was achieved at the 27th Conference of the Parties - known as COP27?
A key outcome of this conference was establishing the mechanisms by which the international
community can reach a net-zero emissions state by 2050 through various measure.
It concluded with a historic decision to establish and operationalize a loss and damage fund, particularly
for nations most vulnerable to the climate crisis.

The conference heard many other announcements:

- The G7 and the V20 launched the Global Shield against Climate Risks, with new commitments of
over USD 200 million as initial funding. Implementation is to start immediately.
- Launch of the Sharm El-Sheikh Adaptation Agenda, enhancing resilience for people living in the
most climate-vulnerable communities by 2030.
- The cover decision, known as the Sharm el-Sheikh Implementation Plan, highlights that a global
transformation to a low-carbon economy is expected to require investments of at least USD 4-6
trillion a year. Delivering such funding will require a swift and comprehensive transformation of
the financial system and its structures and processes, engaging governments, central banks,
commercial banks, institutional investors and other financial actors.
The Conference also saw serious concerns expressed that the goal of developed country Parties to
mobilize jointly USD 100 billion per year by 2020 has not yet been met, with developed countries urged
to meet the goal, and multilateral development banks and international financial institutions called on
to mobilize climate finance.

Slide 49: COP 26: GLASGOW, SCOTLAND, UNITED KINGDOM - 2021

Let us now review the main decisions made at COP 26. The package of decisions at COP 26 included
strengthened efforts to build resilience to climate change, curbing greenhouse gas emissions and
providing the necessary finance for both. Nations reaffirmed their duty to fulfill the pledge of providing
100 billion dollars annually from developed to developing countries. They collectively agreed to work to
reduce the gap between existing emission reduction plans and what is required to reduce emissions, so
that the rise in the global average temperature can be limited to 1.5 degrees. For the first time, nations
are called upon to phase down unabated coal power and inefficient subsidies for fossil fuels. As part of
the package of decisions, nations also completed the Paris Agreement’s rulebook as it relates to market
mechanisms and non-market approaches and the transparent reporting of climate actions and support
provided or received, including for loss and damage.

The Government of India presented the five nectar elements (Panchamrit) of India’s climate action at
COP 26. These included the following
1. Reach 500GWNon-fossil energy capacity by 2030.
2. 50 per cent of its energy requirements from renewable energy by 2030.
3. Reduction of total projected carbon emissions by one billion tonnes from now to 2030.
4. Reduction of the carbon intensity of the economy by 45 per cent by 2030, over 2005 levels.
5. Achieve the target of net zero emissions by 2070

The mantra of LIFE- Lifestyle for Environment to combat climate change was also shared in COP 26. It
was stated that Lifestyle for Environment has to be taken forward as a campaign to make it a mass
movement of Environment Conscious Lifestyles.

Slide 50: NET-ZERO BANKING ALLIANCE (NZBA) - 2021

The industry-led, UN-convened Net-Zero Banking Alliance brings together a global group of banks,
currently representing over fourty one percent of global banking assets, which are committed to
aligning their lending and investment portfolios with net-zero emissions by 2050.

This was a key Alliance which was discussed on the heels of the COP 26 in Glasgow. It is an initiative
under the Principles for Responsible Banking to accelerate science-based climate target setting and
develop common practice. It recognizes the vital role of banks in supporting the global transition of the
real economy to net-zero emission.

As per the members’ Commitment Statement and the accompanying Guidelines for Climate Target
Setting for Banks, the founding members had 18 months from joining the Alliance to formulate and
declare their first set of intermediate decarbonisation targets in their priority sectors. These targets
must be achieved by 2030 at the latest.
The 2022 Progress Report of the Alliance recognizes that while progress is being made, there are
significant gaps in the availability and consistency of climate data—particularly in the emerging markets
and developing countries that are most in need of finance to support the transition. It’s critical that all
stakeholders including governments, central banks and supervisors, businesses, civil society groups,
research organizations, and scientific institutions should take actions to bring about real changes
needed.

Slide 51: INTERNATIONAL FINANCIAL DEVELOPMENTS SOME RELEVANT PRINCIPLES, NETWORKS AND
ASSOCIATIONS

How can international standards, principles and policies will support climate transition?

Let us look at some more important PRINCIPLES, NETWORKS AND ASSOCIATIONS in the international
context

Slide 52: THE EQUATOR PRINCIPLES, 2003

Large infrastructure and industrial Projects can have adverse impacts on people and on the
environment. The Equator Principles (EP) is intended to serve as a common baseline and risk
management framework for financial institutions to identify, assess and manage environmental and
social risks when financing Projects.

As of 2022, more than 130 banks and financial institutions had voluntarily adopted the EP, which is
based on IFC's Performance Standards.

IFC's Performance Standards has become globally recognized as a benchmark for environmental and
social risk management in the private sector.

The EP has become the financial industry standard for environmental and social risk management in
projects.

Financial institutions adopt the EP to ensure that the projects they finance are developed in a socially
responsible manner and reflect sound environmental management practices. By doing so, negative
impacts on project-affected ecosystems and communities should be avoided where possible. If
unavoidable, negative impacts should be reduced, mitigated, and compensated for appropriately.

Slide 53: SUSTAINABLE BANKING AND FINANCE NETWORK (SBFN), 2012

Established in in 2012, Sustainable Banking And Finance Network is a knowledge sharing community of
financial sector regulators, industry associations from emerging markets committed to advancing
sustainable finance for national development priorities, financial market deepening, and stability.

The IFC is SBFN’s Secretariat and knowledge partner, assisting members to develop and implement
national sustainable finance initiatives in line with common tools and a comprehensive measurement
framework designed with members.
As of May twenty twenty four , SBFN represented ninety three institutions from seventy one member
countries, covering US dollar sixty eight trillion or ninety two percent of the total banking assets in
emerging markets.

You can see the three main pillars under the Sustainable Frameworks – ESG Integration, Climate &
Nature related Risk Management and Financing Sustainability.
To date, members have launched and supported over four hundred sustainable finance frameworks,
including roadmaps, regulations, voluntary principles, guidelines, disclosure guidance, including thirteen
national taxonomies.
In April twenty twenty four, Sustainable Banking and Finance Network launched the twenty
twenty four Global Progress Brief and the new online Sustainable Banking and Finance Network
Data Portal, offering the most comprehensive benchmarking of sustainable finance trends and
initiatives across sixty-six Emerging Markets and Developing Economies.

Slide 54: TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD), 2015

The Task Force on Climate-related Financial Disclosures was developed in twenty fifteen to provide a
framework that would help organizations understand that climate change poses a real financial and
operational risk to their operations and finances, collect and disclose decision-useful information on
climate-related risks and opportunities, and help manage the climate risks that were thus measured.

It defined two broad buckets of climate risk – those that arise from the transition to a lower-carbon
economy including regulatory, market, technological, or legal risks, and those that arise from the direct
physical impact of climate change-related hazards, such as chronic or acute flooding, drought etc.

Increasing the amount of reliable information on financial institutions’ exposure to climate-related risks
and opportunities will strengthen the stability of the financial system, contribute to greater
understanding of climate risks and facilitate financing the transition to a more stable and sustainable
economy.

As discussed earlier in this module, financial markets need clear, comprehensive, high-quality
information on the impacts of climate change. This includes the risks and opportunities presented by
rising temperatures, climate-related policy, and emerging technologies in our changing world.

The Task Force on Climate related Financial Disclosures developed a framework with eleven
recommendations and additional industry-specific guidance for financial institutions to develop climate-
related financial disclosures. These disclosures would be adopted by financial institutions and companies
which would help inform investors and other members of the public about the risks and opportunities
they face related to climate change.

The work of the Task Force on Climate related Financial Disclosures has culminated in the launch of the
International Sustainability Standards Board’s IFRS S one and S two Sustainability Disclosure Standards.
The ISSB standards aim to create a global baseline of investor-focused sustainability reporting that local
jurisdictions can build on. As of October twenty twenty three, the Task Force on Climate-related
Financial Disclosures is now subsumed within the International Sustainability Standards Board
standards, with responsibility for companies’ climate-related disclosures now resting with the
International Financial Reporting Standards Foundation.
Slide 55: TCFD RECOMMENDATIONS

In 2017, the TCFD released climate-related financial disclosure recommendations designed to help
companies provide better information to support informed capital allocation.

Its disclosure recommendations are structured around four pillars that represent core elements of how
companies operate. They are governance, strategy, risk management, and metrics and targets. The four
recommendations are interrelated and supported by eleven recommended disclosures that build out
the framework with information that should help investors and others understand how reporting
organizations think about and assess climate-related risks and opportunities. These four pillars are NOT
operating separately or in silos and are interconnected.

Slide 56: INTERNATIONAL SUSTAINABILITY STANDARDS BOARD (ISSB), 2021

The Trustees of the International Financial Reporting Standards Foundation announced the formation of
the International Sustainability Standards Board on third November twenty twenty one at Conference Of
the Parties twenty six in Glasgow to develop standards that will result in a high quality, comprehensive
global baseline of sustainability disclosures focused on the needs of investors and the financial markets.

The International Sustainability Standards Board has set out four key objectives: one to develop
standards for a global baseline of sustainability disclosures; two to meet the information needs of
investors; three to enable companies to provide comprehensive sustainability information to global
capital markets; and four to facilitate interoperability with disclosures that are jurisdiction specific and
aimed at broader stakeholder groups.

In June twenty twenty three, the International Sustainability Standards Board issued its inaugural
standards; the first two International Financial Reporting Standards Sustainability Disclosure Standards, S
one General Requirements for Disclosure of Sustainability-related Financial Information and S two Climate
related Disclosures. These reporting frameworks align with broader goals, including UN Sustainable
Development Goals, and serve as guiding frameworks for developing sustainable finance strategies on a
global scale. The Standards, effective from January twenty twenty four, will help to improve trust and
confidence in company disclosures about sustainability to inform investment decisions.

The ISSB Standards are designed to ensure that companies provide sustainability related information
alongside financial statements in the same reporting package.

International Financial Reporting Standards S one provides a set of disclosure requirements designed to
enable companies to communicate to investors about the sustainability-related risks and opportunities
they face over the short, medium and long term. International Financial Reporting Standards S two sets
out specific climate-related disclosures especially on climate related risks to which the entity is exposed,
which are: climate-related physical and transition risks; and climate-related opportunities available to
the entity and is designed to be used with International Financial Reporting Standards S one.

Both fully incorporate the recommendations of the Task Force on Climate-related Financial Disclosures.
Going forward, with such standards, financial and sustainability reporting will be a requirement, rather
than an addition, of good practice of reporting by entities. The International Sustainability Standards
Board refers to the information disclosed as ‘sustainability-related financial disclosures’ emphasising
that disclosures need to be connected with information in the financial statements, not a disconnected
exercise.

Slide 57: NETWORK FOR GREENING THE FINANCIAL SYSTEM (NGFS), 2017

As of March twenty twenty four, The Network for Greening the Financial System consists of one thirty
eight members and twenty one observers

The Network’s purpose is to help strengthening the global response required to meet the goals of the
Paris agreement and to enhance the role of the financial system to manage risks and to mobilize capital
for green and low-carbon investments in the broader context of environmentally sustainable
development. To this end, the Network defines and promotes best practices to be implemented within
and outside of the Membership of the NGFS and conducts or commissions analytical work on green
finance.

The Reserve Bank of India joined the NGFS as a Member on April 23, 2021, to benefit from the
membership of NGFS by learning from and contributing to global efforts on Green Finance.

Slide 58: INTERNATIONAL CAPITAL MARKETS ASSOCIATION (ICMA) & THE PRINCIPLES

International Capital Markets Association serves as Secretariat to the Green Bond Principles, the Social
Bond Principles, the Sustainability Bond Guidelines and the Sustainability-Linked Bond Principles,
providing support while advising on governance and other issues.

ICMA and its members have worked together to promote the development of the international capital
and securities markets, pioneering the rules, principles and recommendations which have laid the
foundations for their successful operation.

The Principles are a collection of voluntary frameworks with the stated mission and vision of promoting
the role that global debt capital markets can play in financing progress towards environmental and
social sustainability.

• The Green Bond Principles (GBP) are voluntary process guidelines that recommend transparency
and disclosure and promote integrity in the development of the GB market by clarifying the
approach for issuance of a Green Bond.
• Social bonds are use of proceeds bonds that raise funds for new and existing projects with positive
social outcomes. The Social Bond Principles (SBP) seek to support issuers in financing socially sound
and sustainable projects that achieve greater social benefits. Most definitions understand them as a
partnership aimed at improving the social outcomes for a specific group of citizens
• Sustainability bonds are bonds where the proceeds will be exclusively applied to finance or re-
finance a combination of both green and social projects.
• Sustainability-linked bonds aim to further develop the key role that debt markets can play in funding
and encouraging companies that contribute to sustainability (from an environmental and/or social
 and/or governance perspective). It is a fixed income instrument (Bond) where its financial and/or
structural characteristics are tied to predefined Sustainability/ESG objectives.
• According to market data, emerging market issuers issued US dollar two hundred and nine
billion in green, social, and sustainability or sustainability-linked bonds in twenty twenty three,
more than triple the amount issued in twenty twenty. Green bonds remain the principal
component of the Green Social Sustainability and Sustainability linked bond market, accounting
for around two thirds of sales. Meanwhile, thirteen countries account for ninety two percent of
the US dollar four hundred and sixty six point two billion in emerging market green bonds issued
over the two thousand twelve to twenty twenty three period. China alone accounts for US
dollar two ninety two billion, or sixty three percent of the cumulative tally. Other major issuers
include India with a cumulative total of US dollar twenty five billion, Brazil with US dollar
eighteen point one billion, and Chile, at US dollar sixteen point six billion.

The Green Bond Principles are detailed further in the next slide.
Details on India’s sovereign Green Bonds will be part of the next module.

Slide 59 GREEN BOND PRINCIPLES

Green bonds enable capital-raising and investment for new and existing projects with environmental
benefits.

The Green Bond Principles are voluntary process guidelines that recommend transparency and
disclosure and promote integrity in the development of the Green Bond market by clarifying the
approach for issuance of a Green Bond.

The Green Bond Principles are intended for broad use by the market:
(i) they provide issuers with guidance on the key components involved in launching a credible
Green Bond;
(ii) they aid investors by promoting availability of information necessary to evaluate the
environmental impact of their Green Bond investments; and
(iii) they assist underwriters by offering vital steps that will facilitate transactions that preserve
the integrity of the market.

Thy recommend a clear process and disclosure for issuers, which investors, banks, underwriters,
arrangers, placement agents and others may use to understand the characteristics of any given Green
Bond.

The GBP emphasize the required transparency, accuracy and integrity of the information that will be
disclosed and reported by issuers to stakeholders through core components and key recommendations

The four core components for alignment with the GBP are: 1. Use of Proceeds 2. Process for Project
Evaluation and Selection 3. Management of Proceeds 4. Reporting. The key recommendations for
heightened transparency are: (i) Green Bond Frameworks (ii) External Reviews

Slide 60: Test your knowledge: section 4

- Let us now review your understanding of this Section. Answer the questions to the best of your
knowledge and understanding and click Submit.
- The voice over text for question – they should read out the question, the options. Once participants
selects an answer and submits, the system should tell if its correct or not and then read out the text that
we have provided for each answer.
- This is not an evaluation- it is just a break after every section for participants to test their
understanding of the topic

Slide 61: Question 1

The Paris Agreement is a landmark in the multilateral climate change process, it is a binding agreement
that brings all nations into a common cause to undertake ambitious efforts to combat climate change
and adapt to its effects.
With reference to the key attributes & goals of the Paris Agreement, please Choose the correct
statement(s). Select the correct boxes.
1. The Paris Agreement is a legally binding international treaty on climate change. It was adopted
by 196 Parties at COP 21 in Paris, on 12th December 2015 and entered into force on 4th
November 2016.
2. The Paris Agreement works on a 5- year cycle of increasingly ambitious climate action carried
out by countries.
3. The Paris Agreement provides a framework for financial, technical and capacity building
support to those countries who need it.
4. Its goal is to limit global warming to well below 2, preferably to 1.50C, compared to pre-
industrial levels. Emissions need to be reduced by 45% by 2030 and reach net zero by 2050.
Correct Answer is 1, 2, 3, 4
ALL the four statements (1, 2,3, 4) are accurate.

Slide 62: Question 2

On the heels of COP 26 Finance Day, banking industry leaders met in Glasgow to discuss the leadership
role of the banking sector towards net-zero under the UN-convened Net-Zero Banking Alliance (NZBA).
What is the role of the NZBA?
Choose the correct statement(s). Select the correct boxes.
1. The NZBA enables banks to take a consistent, international approach to net zero, promoting
alignment on key issues such as measurements and disclosures.
2. The NZBA enables banks to take a UNCCC approach to net zero, promoting alignment on key
issues of Climate Change.
3. Banks in the Alliance committed to using robust, ambitious, science-based targets to
decarbonize their lending and investment portfolios on a 2 degree climate trajectory to achieve
net zero emissions by 2075.
4. Banks in the Alliance committed to using robust, ambitious, science-based targets to
decarbonize their lending and investment portfolios on a 1.5 degree climate trajectory to
achieve net zero emissions by 2050.
Correct Answer is 1, 4
The NZBA enables banks to take a UNCCC approach to net zero, promoting alignment on key
issues of Climate Change. Further, Banks in the Alliance committed to using robust, ambitious,
science-based targets to decarbonize their lending and investment portfolios on a 1.5 degree
climate trajectory to achieve net zero emissions by 2050.
Slide 63: Question 3

The Task Force on Climate-Related Financial Disclosures (TCFD) was created in 2015 by the Financial
Stability Board (FSB). What was the role of the TCFD?
1. To develop consistent climate-related financial risk disclosures for use by Regulator in providing
information to stakeholders.
2. To develop consistent climate-related financial risk disclosures for use by companies, banks, and
investors in providing information to stakeholders.
3. To develop a framework on Credit Risk for use by Banks and FIs.
4. To develop Greenhouse Gas related documentation and evidence for Governments who signed
TCFD, in order to providing accurate information to stakeholders.
Correct Answer is 2
To develop consistent climate-related financial risk disclosures for use by companies, banks, and
investors in providing information to stakeholders.
TCFD’s 11 disclosure recommendations span four different areas: governance, strategy, risk
management, and metrics and target

Slide 64: Question 4

The Green Bond Principles (GBP) are voluntary process guidelines that recommend transparency and
disclosure and promote integrity in the development of the Green Bond market by clarifying the
approach for issuance of a Green Bond.
1. Yearly updates to Investors
2. Process for Project Evaluation and Selection
3. Process of Listing of Bonds
4. GHG Emissions
Correct Answer is 2
The four core components for alignment with the GBP are (Choose from the following options):
Use of Proceeds, Process for Project Evaluation and Selection, Management of Proceeds and
Reporting.

Slide 65: Section 5 - CLIMATE CHANGE: THE INDIAN CONTEXT

How is India already acting now on climate change?

In Section 5, we will cover the impact of change in India, the regulatory and policy environment and the
gaps and opportunities related to scaling up climate finance in the country.

Slide 66: IPCC ON INDIA - 1/2

Let us first look at where India stands on the impacts of climate change. The IPCC Sixth Assessment
Report observes that the impacts on climate change that are human-induced, which has accelerated
recently with the advent of new extreme events in nature. India is one of the global hotspots identified
in the IPCC report in terms of geographical and socio-economic vulnerabilities.

Given the range of impacts India is vulnerable to which include heat stress which can increase beyond
the threshold of human survivability; impacts on food production due to climate change which includes
food crops, fisheries; compounding disasters; and disasters taking elsewhere which will impact
international supply chains, markets, trade and result in economic shocks.
India is also one of those countries which are most vulnerable to sea-level rise: By the middle of the
century, around 35 million people in India could face annual coastal flooding, with 45-50 million at risk
by the end of the century if emissions are high. Given the range of impacts from climate change, India's
food production and food security will also be severely hit. Combined with disasters taking place across
the world, this will impact international supply chains, markets, trade and result in economic shocks.

Climate change could also mean that about 40% of people in India will live with water scarcity by 2050
compared with about 33% now. Ganges and Brahmaputra river basins could see increased flooding if
warming passes 1.5°C.

The graphs on the right hand shows the project percentage change in annual mean precipitation, for
different scenarios – at global warming levels at 4 degrees, 2 degrees and 1.5 degrees, if we read the
chard from top, middle and bottom respectively. --- For example, in parts of the Indian sub-continent,
the projected changes in mean precipitation at 1.5°C global warming range from a 10–20% decrease to a
40–50% increase.

Slide 67: IPCC ON INDIA - 2/2

The IPCC Report further stresses that the risks to cities, settlements and infrastructure from heatwaves
will worsen.

Theis slide shows the global distribution of population exposed to hypothermia from extreme heat and
humidity from 2020 to 2050 to 2100. The RCP term in the Chart refers to the ‘Representative
Concentration Pathway’ which is a greenhouse gas concentration trajectory adopted by the IPCC. The
“RCP2.6” values in the chart are representative of a scenario that aims to keep global warming likely
below 2°C above pre-industrial temperatures, while the “RCP 8.5 is the highest baseline emissions
scenario in which emissions continue to rise throughout the twenty-first century.

It report refers to wet-bulb temperatures, a measure that combines heat and humidity. (A wet-bulb
temperature of 31°C is extremely dangerous for humans, while a value of 35°C is unsurvivable for more
than about 6 hours, even for fit and healthy adults resting in the shade). Most of the Indian states and
cities could reach dangerous levels by the end of the century.

India is also seen as the most vulnerable country in terms of crop production. Rice, wheat, pulses, coarse
and cereal yields could fall almost 9% by 2050. In the South, maize production could decrease 17% if
emissions remain high.

However, the adaptation plans for Indian cities currently focus only on one or two risks while ignoring
the compounding nature of disasters such as tropical cyclones coinciding with heatwaves and urban
droughts.

As such risks increase, the report says, the adaptive capacity of local communities will be threatened,
especially low-income marginalized communities

Slide 68: KEY DEVELOPMENTS: INDIA

This slide shows the progress in India over the years on climate related polices and developments. There
are international and domestic levels to India’s climate change policy.
The National Action Plan on Climate Change is the domestic, regionally focused action plan that has
been in place since 2008. It is the major climate action plan in India, which has eight sub-plans. Each
mission is under a different ministry.

There has been a level of awareness at the policy level in India on the significance of development that is
climate change sensitive, environmentally friendly, and sustainable. The Indian government has factored
environmental concerns into policy since the early 2000s, with the Electricity Act in 2003.

Further policy developments have happened in the areas of disaster management, emissions,
afforestation, etc. As of 2022, SEBI and RBI have released several consultation papers related to climate
finance
In two thousand seventeen, Securities and Exchange Board of India issued disclosure requirements for
issuance and listing of Green Debt securities which was further updated in twenty twenty three.

In December 2022, the Energy Conservation (Amendment) Act 2022 was issued, and it lays the legal
framework for establishing a carbon credit market, mandatory use of non-fossil fuel including green
hydrogen, green ammonia, biomass and ethanol and energy conservation code for buildings. This is
expected to give an impetus to India’s efforts to access greener sources of energy

A key highlight to note is that in December 2022, India assumed the presidency of the G20 forum, taking
over from Indonesia. The theme also spotlights LiFE (Lifestyle for Environment), with its associated,
environmentally sustainable and responsible choices, both at the level of individual lifestyles as well as
national development, leading to globally transformative actions resulting in a cleaner, greener and bluer
future. Sustainable Finance Working Group is a newly established group under the 2021 G20 Italian
Presidency co-chaired by the US and China. The working group deliberates on how to help focus the
attention of the G20, international organizations and other stakeholders to key priorities of the
sustainable finance agenda and form consensus on key actions to be taken.

In January 2023, Government of India announced the sale (issue) of Sovereign Green Bonds for rupees
sixteen thousand crore, through auction in two tranches in January and February.

In April 2023, Reserve Bank of India also notified a framework for raising green deposits by banks, small
finance banks and deposit taking non-banking finance companies.

In December twenty twenty three, taking into consideration the critical need for transition finance, the
development of such financing instruments being at a nascent stage, and lack of globally recognized
framework as in the case of green or sustainable labelled debt securities, International Financial Services
Centres Authority has formed an expert committee on Transition Finance consisting of representation
from industry, standard setters, consultants, think tanks etc. to recommend a regulatory framework for
transition finance instruments and measures to promote transition finance..

In February twenty twenty three, with a view to align the extant framework for green debt securities
with the updated Green Bond Principles , Securities and Exchange Board of India has amended Chapter
nine of the Non-Convertible Securities Operational circular. As per the amended norms, an issuer
desirous of issuing Green Debt Securities is required to make additional disclosures in the offer
document for public issues orprivate placements.
In February twenty twenty four, RBI released a draft regulation titled Draft Disclosure Framework on
Climate-related Financial Risks.. The Draft is a follow on to the Discussion Paper on Climate Risk and
Sustainable Finance that RBI released in July twenty twenty two. Both the Discussion Paper and the
Draft Disclosure Framework are built around the TCFD recommendations
We will discuss some of these key developments in greater detail in this section.

Slide 69: INDIA’S NATIONALLY DETERMINED CONTRIBUTION

India submitted its Intended Nationally Determined Contribution (NDC) to the United Nations
Framework Convention on Climate Change (UNFCCC) on 2 nd October 2015.

This included ambitious targets for reducing emissions intensity, increasing electric power capacity from
reneweable energy sources, and expanding India's carbon sinks.

This has evolved over time, and in August 2022, India updated its NDC, building on the Prime Minister’s
‘Panchamrit’ pledge issued at Glasgow. The pledge retains the headline long-term goal of reaching net
zero by 2070

The Updated NDC to be implemented over the period 2021-2030 has three main elements:
- An emissions-intensity target of 45% below 2005 levels by 2030
- A target of achieving 50% cumulative electric power installed capacity from non-fossil fuel-based
energy resources by 2030; and
- Creation of a carbon sink of 2.5 to 3 GtCO2e through additional forest and tree cover by 2030.

Recognizing that lifestyle has a big role in climate change, the Hon’ble Prime Minister of India, at COP
26, proposed a ‘One-Word Movement’, to the global community. This one word is LIFE…L, I, F, E, i.e.
Lifestyle For Environment. The vision of LIFE is to live a lifestyle that is in tune with our planet and does
not harm it. India’s updated NDC also captures this citizen centric approach to combat climate change.

It also takes forward this vision of sustainable lifestyles and climate justice to protect the poor and
vulnerable from adverse impacts of climate change.

The updated NDC reads "To put forward and further propagate a healthy and sustainable way of living
based on traditions and values of conservation and moderation, including through a mass movement fo r
‘LIFE’– ‘Lifestyle for Environment’ as a key to combating climate change

Slide 70: SUSTAINABLE FINANCE IN INDIA: KEY DEVELOPMENTS

As you saw in an earlier slide, several developments have taken place in India in this space. A few of the
recent ones are highlighted in this slide:

- The Reserve Bank of India (RBI) joined the Central Banks and Supervisors Network for Greening
the Financial System (NGFS) as a Member on April 23, 2021, to benefit from the membership of
NGFS by learning from and contributing to global efforts on Green Finance. NGFS was discussed
in the previous section
 - RBI is also represented in the G20 Sustainable Finance Working Group, Financial Stability Board’s
Working Group on Climate Risk and Work Stream on Climate-related Disclosures, Task Force on
Climate-related Financial Risks set up by the Basel Committee on Banking Supervision
- In May 2021, the RBI set up the Sustainable Finance Group (SFG) within its Department of
Regulation (DoR) to lead the efforts and regulatory initiatives in the area of climate risk and
sustainable finance. The SFG would be instrumental in suggesting strategies and evolving a
regulatory framework, including appropriate disclosures, which could be prescribed for banks
and other regulated entities to propagate sustainable practices and mitigate climate-related
risks in the Indian context.
- India also joined International Platform on Sustainable Finance (IPSF) in 2019 to scale up the
environmentally sustainable investments.
- Indian Banks’ Association, which represents nearly 250 banks, is a member of the Sustainable
Banking and Finance Network (SBFN)
- In January twenty twenty one, a Task Force on Sustainable Finance was established by the
Ministry of Finance. The Task Force is mandated with conceptualising India’s sustainable
finance framework, including the critical tasks of proposing a draft taxonomy of sustainable
activities and risk assessment by the financial sector.
- In February twenty twenty four, RBI released the draft framework for banks and financial
institutions to assess and disclose their exposure to climate risks The framework mandates
disclosure by regulated entities on four key areas of governance, strategy, risk management and
metric and targets.

Slide 71: CLIMATE FINANCE ECOSYSTEM: KEY STAKEHOLDERS

Let us now look at the main actors in climate finance ecosystem. These include:
• Governments and Regulators for policy and regulation to support financial flows necessary for
green transition.
• Development Finance Institutions to provide financing
• Climate Funds aim to mobilize funding at scale to invest in low-emission and climate-resilient
development
• International capital markets provide forums and mechanisms for governments, companies, and
people to borrow or invest or both across national boundaries.
• Domestic capital markets financial institutions including public and private sector banks, NBFCs
to mobilize the resources needed for investments in climate
• Corporates are one of the largest providers of climate finance, through their ever-increasing
volumes of investments across multiple sectors
• Rating agencies provide insights into the financial risk of organizations including those related to
climate change
• The role of insurance in the battle to cope with the effects of climate change is clear. Insurance
policies which provide cover for climate impacts and risks is vital for protecting livelihoods.
Moreover, as a holder of very substantial amounts of finance, the insurance industry can play an
important role as a finance provider to climate change mitigation and adaptation investments.
• Community-focused approaches for example online fundraising have made it easier to campaign
to raise finance for the development/commercialization of specific ideas and technologies.
• Foundations group often funds the research into the ideas and products which in turn impact on
the climate finance landscape and help organizations play their role in addressing climate
change.
 • Official bodies such as UNFCCC, the UNEP, the OECD, and the G20. an important role in
coordinating public and private finance sources, as well as providing limited finance themselves.

Many of these also play a role in capacity building, research, piloting and demonstrating new
approaches and technologies, and removing barriers to other climate finance flows.

Slide 72: KEY NODAL MINISTRIES & BODIES (1/2)

We will now price a quick overview of the key Ministries and Bodies that play an important role in
climate and climate finance related issues in India

1. The Ministry of Finance is concerned with the economy of India, serving as the Treasury of
India. In particular, it concerns itself with taxation, financial legislation, financial institutions,
capital markets, centre and state finances, and the Union Budget.
2. Ministry of New and Renewable Energy is the nodal Ministry of the Government of India for
all matters relating to new and renewable energy. The broad aim of the Ministry is to
develop and deploy new and renewable energy to supplement the energy requirements of
the country.
3. Ministry of Environment, Forests and Climate Change is the nodal agency in the
administrative structure of the Central Government for planning, promotion, co-ordination
and overseeing the implementation of India's environmental and forestry policies and
programmes.
4. Ministry of Water Resources is responsible for laying down policy guidelines and
programmes for the development and regulation of country's water resources.

Slide 73: KEY NODAL MINISTRIES & BODIES (2/2)

5. Ministry of Power is mainly responsible for evolving general policy in the field of energy. The
Ministry is concerned with perspective planning, policy formulation, processing of projects
for investment decision, monitoring of the implementation of power projects, training and
manpower development and the administration and enactment of legislation in regard to
thermal, hydro power generation, transmission and distribution.
6. Bureau of Energy Efficiency is an agency of the Government of India, under the Ministry of
Power. Its function is to develop programs which will increase the conservation and efficient
use of energy in India.
7. Indian Renewable Energy Development Agency Limited is a Government of India Enterprise
under the administrative control of the MNRE. It was established as a Non-Banking Financial
Institution to promote, develop and extend financial assistance for setting up projects
relating to new and renewable sources of energy and energy efficiency/conservation.

Slide 74: STATEMENT ON DEVELOPMENTAL AND REGULATORY POLICIES, FEBRUARY 2023

On February 8, 2023, the Reserve Bank of India issued a statement on development and regulatory
policies.

This Statement sets out various developmental and regulatory policy measures relating to (i) Financial
Markets; (ii) Regulation; (iii) Payment and Settlement Systems and (iv) Currency Management.
Under Regulations, the statement mentions the Regulatory Initiatives on Climate Risk and Sustainable
Finance.

It states that the Reserve Bank recognises that climate change can translate into climate-related
financial risks for Regulated Entities which can have broader financial stability implications. Therefore,
to prepare a strategy based on global best practices on mitigating the adverse impacts of climate
change, a Discussion Paper on Climate Risk and Sustainable Finance was placed on RBI website on July
27, 2022, for public comments and feedback. Based on analysis of the feedback received in this regard,
it has been decided to issue the following guidelines for the Regulated Entities:

- Broad framework for acceptance of Green Deposits;

- Disclosure framework on Climate-related Financial Risks, and;

- Guidance on Climate Scenario Analysis and Stress Testing.

The guidelines will be issued in a phased manner.

Further, the Reserve Bank shall have a dedicated webpage on its website which will consolidate all
instructions, press releases, publications, speeches and related RBI communication on climate risk and
sustainable finance.

Slide 75: RBI’S REPORT OF THE SURVEY ON CLIMATE RISK AND SUSTAINABLE FINANCE, JULY 2022
(1/2)

In light of increasing climate-related challenges and financial risks, the Reserve Bank of India in July 2022
released a discussion paper to get feedback regarding possible regulatory frameworks in the coming
future. Along with this paper, it also released the results of a Survey on Climate Risk and Sustainable
Finance undertaken in January 2022.

The survey was carried out to assess the approach, level of preparedness and progress made by leading
scheduled commercial banks in managing climate risk. The survey covered 12 public sector banks, 16
private sector banks and 6 foreign banks in India.

It provides useful insights and the feedback from this exercise will help in shaping the regulatory and
supervisory approach of the RBI to climate risk and sustainable finance.

The Key Observations from the Survey are:

▪ About a third of the banks surveyed, responsibility for overseeing initiatives related to climate risk
and sustainability was yet to be assigned. Furthermore, only a few banks have included climate
risk/sustainability/environmental, social and governance (ESG) related Key Performance Indicators
in the performance evaluation of their top management.
▪ A majority of the banks did not have a separate business unit or vertical for sustainability and ESG-
related initiatives. Only a few banks had a strategy for embedding ESG principles in their business,
scaling up their sustainable finance portfolio and incorporating climate change risks into their
existing risk management framework.
▪ Almost all the surveyed banks recognized the urgency of Risk management, and most of them
considered climate-related financial risks to be a material threat to their business. Some of the
banks are not just considering climate and environment-related risks, rather they are also focusing
on the social and governance aspects while evaluating credit proposals above a certain amount. A
 few banks are also attempting to quantify the amount of their loan and investment portfolio that is
susceptible to such risks.

Slide 76: RBI’S REPORT OF THE SURVEY ON CLIMATE RISK AND SUSTAINABLE FINANCE, JULY 2022
(2/2)

▪ Transition to low-carbon exposure: Most of the surveyed banks have decided to gradually reduce
their exposure to high-carbon emitting/polluting businesses in the coming years. A few banks have
either mobilized new capital to scale up green lending and investment or set a target for
incremental lending and investment for sustainable finance. Most banks have launched a few loan
products to tap the opportunities from climate change.
▪ Climate-related financial disclosures: A majority of the banks have not aligned their climate-related
financial disclosures with any internationally accepted framework.
▪ Moving towards a low-carbon environment in banking operations: Most banks have either taken
some measures or have plans to decrease the absolute carbon emissions arising from their
operations and increase the proportion of renewable energy in their total sourced electricity.
▪ Capacity building and data gaps: Most banks are looking at capacity building to better understand
the financial implications of climate risk. Further, most banks felt that the available data was
insufficient for an appropriate assessment of climate-related financial risks and the processes and
methodologies to measure and monitor climate-related financial risks were also not sufficiently
developed.

The responses from the survey indicated that although banks have begun taking steps in the area of
climate risk and sustainable finance, there remains a need for concerted effort and further action in this
regard.

Slide 77: FRAMEWORK FOR ACCEPTANCE OF GREEN DEPOSITS, RESERVE BANK OF INDIA

In keeping with the ambition to significantly reduce the carbon intensity of the economy, the Union
Budget 2022-23 announced the issue of Sovereign Green Bonds.

The Green Bond Framework (Framework) sets forth the obligations of the Government of India (GoI) as
a Green Bond issuer. The Framework applies to all sovereign Green Bonds issued by the GoI. Payments
of principal and interest on the issuances under this Framework are not conditional on the performance
of the eligible projects. Investors in bonds issued under this Framework do not bear any project related
risks.

In January 2023, Government of India announced the sale of Sovereign Green Bonds for ₹8,000 crore,
through auction. This consists of auctioning two green bonds with tenures of 5 and 10 years, worth Rs
4,000 crore. This auction was the part of the Rs 16,000 crore sovereign bond auction to be conducted by
the RBI in the current fiscal.

Slide 78: FRAMEWORK FOR SOVEREIGN GREEN BONDS GOVERNMENT OF INDIA

In keeping with the ambition to significantly reduce the carbon intensity of the economy, the Union
Budget 2022-23 announced the issue of Sovereign Green Bonds.

The Green Bond Framework (Framework) sets forth the obligations of the Government of India (GoI) as
a Green Bond issuer. The Framework applies to all sovereign Green Bonds issued by the GoI. Payments
of principal and interest on the issuances under this Framework are not conditional on the performance
of the eligible projects. Investors in bonds issued under this Framework do not bear any project related
risks.

In January 2023, Government of India announced the sale of Sovereign Green Bonds for ₹8,000 crore,
through auction. This consists of auctioning two green bonds with tenures of 5 and 10 years, worth ₹
4,000 crore. This auction was the part of the ₹ 16,000 crore sovereign bond auction to be conducted by
the RBI in the current fiscal. The auction for the second issuance took place on February 9, 2022, and
raised an equivalent amount.

Slide 79: DRAFT DISCLOSURE FRAMEWORK ON CLIMATE-RELATED FINANCIAL RISKS, RESERVE BANK
OF INDIA

RBI released the draft framework for banks and financial institutions to assess and disclose their exposure
to climate risks in February twenty twenty four. The framework mandates disclosure by regulated entities
on four key areas of governance, strategy, risk management and metric and targets.

In governance pillar an entity is required to disclose the board and senior management’s roles in the
assessment and management of climate risks and opportunities.

In strategy pillar the entities are required to identify risks and opportunities over different time horizons,
undertake impact assessment, set targets, exercise stress tests and scenario analysis to manage them.

In risk management the entities are required to transparently disclose their policies and procedures for
managing climate-related risks and opportunities.

The disclosures on metrics and targets are aimed to provide information on the entity's performance vis-
a-vis its climate-related financial risks and opportunities. The current disclosure framework is a step
towards bringing the climate risk assessment, measurement and reporting requirements under
mainstream compliance framework for financial sector entities in India.
These guidelines are applicable to all scheduled commercial banks excluding local area banks, payments
banks and regional rural banks tier-four primary urban co-operative banks, All-India Financial Institutions
and top and upper layer non-banking financial companies. Other entities may voluntarily make these
disclosures. By promoting transparency and accountability in this area, the RBI aims to enhance the
resilience of the financial sector and contribute to more sustainable economic development

Slide 80: GREEN FINANCE: GAPS AND OPPORTUNITIES

Let us conclude this module by looking at the green finance gaps and opportunities in India.

▪ India needs approximately INR 162.5 lakh crores 2030 for NDCs and INR 716 lakh crores to
achieve Net-Zero emissions by 2070.
▪ Green finance flows in India total INR 309 thousand crores per annum for FY2019- 20 which is
far less than India’s green finance needs.
▪ Domestic sources continue to account for the majority of green finance, with 87% and 83% in FY
2019 and FY 2020, respectively. Of these domestic sources, the private sector contributed about
59%.
Despite several initiatives, the climate funding gap continues to be is a key barrier in achieving
ambitious climate goals stated in the NDCs and several challenges still need to be addressed. The
financial sector players face the barriers such as these include but are not limited to lack understanding
of green sector finance, risk perception – which means perceived bankability issues such as high
transaction costs, long gestation periods, and higher risk-return profiles, lack of a green finance
taxonomy and climate definitions, non-standardized reporting of data, and lack of green tagging of FI
portfolios. I hope this module provided you with ideas, tools and resources to act together to respond to
the climate change challenges of today.

Slide 81: Test your knowledge: section 5

- Let us now review your understanding of this Section. Answer the questions to the best of your
knowledge and understanding and click Submit.
- The voice over text for question – they should read out the question, the options. Once participants
selects an answer and submits, the system should tell if its correct or not and then read out the text that
we have provided for each answer.
- This is not an evaluation- it is just a break after every section for participants to test their
understanding of the topic

Slide 82: Question 1

In Aug 2022 India updated its first nationally determined contributions (NDCs) target up to 2030 (i.e.,
updated from those submitted originally in October 2015). One of the changes is mentioned below.
Please select the correct answer.
1. To reduce Emission Intensity of GDP by 55% by 2030, from 2005 level
2. To reduce Emission Intensity of GDP by 25% by 2030, from 2005 level
3. To reduce Emission Intensity of GDP by 45% by 2030, from 2005 level
4. To reduce Emission Intensity of GDP by 75% by 2030, from 2005 level

Correct Answer is 3
India now stands committed to reduce Emissions Intensity of its GDP by 45 percent by 2030.
This is a step towards achieving India’s long term goal of reaching net-zero by 2070.

Slide 83: Question 2

As per the Sixth Assessment Report of the IPCC, what are some of the areas of concern highlighted for
India/Asia, incase of increased climate warming?
Please select the most correct answer(s). Select the correct boxes.
1. As per the Sixth Assessment Report of the IPCC, Asia is identified as one of regions most
vulnerable to climate change, especially on extreme heat, flooding, sea level rise, and erratic
rainfall.
2. Climate change could also mean that about 40% of people in India will live with water scarcity by
2050 compared with about 33% now. Ganges and Brahmaputra river basins could see increased
flooding if warming passes 1.50C.
3. In parts of the Indian sub-continent, the projected changes in mean precipitation at 1.50C global
warming range from a 10–20% decrease to a 40–50% increase.
 4. India is also one of those countries which are most vulnerable to sea-level rise: By the middle of
the century, around 35 million people in India could face annual coastal flooding, with 45-50
million at risk by the end of the century if emissions are high.

Correct Answer: ALL STATEMENTS ARE CORRECT.

Slide 84: Question 3

As per the draft disclosure framework on the climate related financial risks published by RBI in February
2024, which of the following are related to the framework guidelines.
Please select the most correct answer(s). Select the correct boxes.
1. The framework under the strategy pillar mandates entities to identify risks and opportunities
over different time horizons
2. The framework mandates disclosure by un-regulated entities within and outside India
3. The framework is applicable to scheduled commercial banks (SCBs), tier-IV primary (urban) co-
operative banks (UCBs), All-India Financial Institutions (AIFIs) and top and upper layer non-
banking financial companies (NBFCs).
4. The four key thematic pillars of the disclosure framework are (i) Governance, (ii) Strategy, (iii)
Risk Management, (iv) Metrics & Targets

Correct Answer: ALL STATEMENTS EXCEPT 2 ARE CORRECT. The RBI mandates the disclosure
framework to be followed by the Regulated Entities (RE) in India which are regulated by RBI.

Slide 85: WHAT HAVE YOU LEARNT

Key learnings from this module include the following

• Basic concept of climate change

• Tackling climate change and fostering sustainable development
• Key developments in climate finance globally
• International governance for climate change
• Climate finance landscape in India

Slide 86: KNOWLEDGE RESOURCES

You can read and learn about the sector by accessing the knowledge resources provided in the next two
slides

Slide 87-89 – no VO

Slide 90: KNOWLEDGE RESOURCES (2/2)

With this we complete Module 1 of the Foundation Course on ‘Climate Risk and Sustainable Finance’
You can review the course content again or take a 10-question knowledge assessment directly.
You have to complete the assessment before moving to Module 2 of this Foundation course