World Environment Day: Indian Financial System Funding Infrastructure Projects In The Hills Faces A Himalayan Challenge
The State of India’s Environment 2024 report by the Centre for Science and Environment reveals that nearly half (44 per cent) of all climate-related events recorded in India between 2013 and 2022 took place in the Himalayan region. The Indian financial system is quite literally facing a Himalayan challenge. As the Himalayan region veers down the climate precipice with rising temperatures, unprecedented rains, floods, landslides, avalanches and threateningly expanding glacial lakes, it has become a critical site for what bankers refer to as climate-related finance risks. All big investments such as dams, tunnels, highways, solar parks and transmission lines dotting the mountain region, and those at the planning stage, are at risk of physical destruction owing to climate-related extreme events. As a result, investing institutions are staring at rising costs and possible losses. How should Financial Institutions (FIs) such as banks and non-banking financial institutions take into account climate-induced risks while extending big credit for projects in the increasingly vulnerable Himalayan region? This is the question that looms large as we observe yet another World Environment Day today. The numerous guidelines issued by the Reserve Bank of India (RBI) to banks and other FIs on how to incorporate ‘climate-related financial risks’ face the Himalayan test, especially when India is on a building spree on its seismically sensitive mountains. The Rising Graph of Himalayan Vulnerability The recent spurt of disasters—unprecedented rain episodes, floods and landslides—witnessed in the Himalayas are highlights of the grim futures prophesied by science. The State of India’s Environment 2024 report by the Centre for Science and Environment reveals that nearly half (44 per cent) of all climate-related events recorded in India between 2013 and 2022 took place in the Himalayan region.
