India Country Report

Policy Lever: Enhancing Market Practice

 Levers to enhance market practice are focused on improving the efficiency and accountability of financial markets. They  improve risk assessment and pricing - ultimately seeking to improve investor decision-making and returns.  This has to date been the most popular approach to internalizing sustainable development into financial decision-making.

Examples

Key approaches include:
  • Fiduciary duty and capacity: clarifying that duties to clients include sustainability factors and including requirements for knowledge and training on sustainability for fiduciaries.
  • Incentives: Encouraging asset owners to ensure better alignment of incentives along the investment chain.
  • Prudential risk management regulation: Integrating sustainability into guidance & requirements on risk management and controls.
  • Stress tests: Developing scenarios to test impact of environmental shocks on assets and business models.
  • Capital requirements: Calibrating capital requirements to incorporate environmental factors.
  • Disclosure requirements: Making environmental reporting by financial institutions and non-financial corporations mandatory.
  • Equity analysis: Encouraging greater transparency in equity analysis of incorporation of sustainability factors.
  • Credit ratings: Encouraging the integration of sustainability risk factors into credit analysis.
  • Green assets Adjusting standards and rules to facilitate capital raising (e.g. green bonds, green sukuks, green IPOs, yieldcos).
  • Indexes: Ensuring that benchmarks and indices reflect critical sustainability factors.

Impacts

These measures provide critical foundations of information needed to sensitise financial decision making to environmental impacts and risks, but they are likely to have a modest impact unless they are combined with additional shifts that make these risks financially material.   

Inquiry Publications

  • France Country Report

    Date: 23-Nov-2015

    This report highlights experience from France in improving the integration of sustainability issues into financial decision-making. A key area of focus has been on improving information and market analysis. Environmental, social and governance (ESG) reporting requirements were first introduced in the New Economics Regulation law of 2001, and strengthened by the 2010 ‘Grenelle II’ law and 2015 the

  • Lenders and Investors Environmental Liability

    Date: 19-Apr-2016

    This working paper presents an overview of Lender Environmental Liability (LEL) and Investor Environmental Liability (IEL) regimes and issues. Environmental harm and degradation is often irreparable. Therefore, our assumption is that precaution is the main objective of any international and domestic environmental legal regime. The paper explores the conditions under which LEL/IEL can be effective

  • Experience and Lessons from South Africa: An Initial Review

    Date: 17-Jun-2016

    This paper provides an outline of South Africa’s financial sector, the environmental and social issues it faces, the response of government and financial regulators and the extent to which has resulted in measurable sustainable investment flows. In South Africa environmental, social and governance (ESG) considerations appear on the agenda of strategic discussions and are part of the

  • Green Foreign Direct Investment in Developing Countries

    Date: 23-Oct-2017

    This paper focuses on the actual and potential role of foreign direct investment (FDI) in achieving the transition to a low-carbon, just and sustainable world and, more specifically, FDI flows into developing countries. The particular implications of FDI on the environment – both potentially positive and negative – have given rise to an interest in

  • India Country Report

    Date: 29-Apr-2016

    An India Advisory Council of the UNEP India Inquiry was convened by the Federation of Indian Chambers of Commerce and Industry (FICCI). This report highlights key proposals emerging from their discussions for aligning the Indian financial system with sustainability. In the Indian context, they call for development of a more robust and resilient ‘sustainability-oriented market framework’ focused

  • Stock Exchanges and Sustainability

    Date: 23-Dec-2015

    Stock exchanges have historically played an important role in economic growth and development through enabling effective capital allocation. However, exchanges and markets more broadly have changed over time, in structure, inter-connectedness and rate of activity. This has happened against a backdrop of growing recognition of the unsustainability of the current economic growth path in both

  • The Role of Policy-Driven Institutions

    Date: 24-Aug-2015

    A variety of interventions can be used to develop national financial systems and provide local access to affordable, long-term finance. This paper considers four key categories of actions: voluntary action; priority sector lending; regulatory or financial incentives as well as direct lending by policy-driven financial institutions. It particularly focuses on the role of policy-driven institutions such

  • Aligning the Financial System with Sustainable Development in the United States of America

    Date: 01-Feb-2016

    The US financial system is undoubtedly among the largest, most innovative and most sophisticated in the world. It is also clear that this is both a benefit and an impediment to non-governmental investment in sustainability and inclusiveness. To date, the actual investment in infrastructure and sustainability does not meet current needs, especially those related to maintaining

  • Collaborative Initiative for Green Finance in Singapore

    Date: 15-Nov-2017

    This Report aims to mainstream and socialise the idea and opportunities associated with Green Finance, as well as to explore how Singapore as a financial hub can offer Green Finance as additional expertise to better serve the needs of the ASEAN and Asia region. Besides the members of the financial community, the Report hopes to

  • Indonesia Country Report

    Date: 30-Apr-2015

    Placing Indonesia’s economy onto a green and sustainable development pathway, as envisaged in the National Long Term Development Plan, will require a large mobilization of investment. Estimates of the annual investment needed are in the order of US$300‐530 billion, with a large portion of this investment needed in critical infrastructure, as well as environmentally sensitive

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