Climate Risk Mainstreaming: The Roadmap for Financial Institutions in India
Channel: Sankalp Forum
Date: 2020-11-04

The Indian economy has incurred over USD 80 billion in economic losses over the last two decades (2000-2019) due to the devastating impacts of climate change, of which USD 37 billion was lost in 2018 alone. This underscores the concerns about India’s ranking at number 5 in the Global Climate Risk Index of 2020. The country is anticipated to lose approximately 10% of its economy by the year 2100, if significant and tangible climate risk redressal measures are not taken urgently. According to the 2019 report of the Task Force on Climate-related Financial Disclosures, climate change is set to cost businesses and investors over USD 1.2 trillion globally over the next 15 years. 

Economic and financial systems have been designed and optimized to absorb certain thresholds of climate risks. However, increasing & virulent climate hazards tend to render such systems vulnerable to potential failure when they reach such systemic tipping points.

This has catalyzed an increasingly rising realization that the entire stakeholder community comprising investors, financial institutions, ecosystem enablers and governments need to be more acutely aware of and be pragmatic about incorporating climate resilience and adaptation measures urgently. Even though the discussions on climate risk mainstreaming have gained momentum since the 1980’s, these deliberations are still in their early stages in India. Notwithstanding several global initiatives such as the Task Force on Climate related Financial Disclosures (TCFD) and Carbon Disclosure Project (CDP) recommending multiple climate risk incorporating measures to a variety of stakeholders worldwide, only a few financial institutions from India (for example, Yes Bank and Ecube Investment Advisors) are part of the TCFD framework.

Overall, there is critical and pressing need to bring about resonance on the issue of climate risk mainstreaming in the operations of financial institutions in India. It is imperative to formulate actionable strategies and time-bound implementation plans for the purpose. This is all the more necessary since climate risk integration is in its infancy in India. Therefore, a rational case for enabling a common platform to bring all stakeholders to deliberate and deliver climate risk mainstreaming programs and measures becomes paramount.  

This session will feature various stakeholders, including investors, ecosystem builders, financial institutions, microfinance institutions, among other among others, who will look at ways and means to establish an enabling environment for climate risk mainstreaming for financial institutions in India. The objective of this session is to create an informed awareness, promote constructive dialogue and enable shared learnings among the representative stakeholder groups. This could potentially help in implementation of climate risk mainstreaming approaches in the country. 

This session is supported by Intellecap