India's G20 Presidency highlighted the flaws in the current multilateral climate finance system, calling for greater transparency and accountability. Under Prime Minister Narendra Modi, the country is pushing for reforms to mobilize private capital and meet the needs of the Global South. This effort addresses longstanding ambiguities that have undermined trust in international climate commitments.
The architecture of global climate finance has long been criticized for its opacity and inequity, prioritizing creditors over climate action in vulnerable nations. As Union Minister for Environment, Forest and Climate Change Bhupender Yadav writes, India's G20 Presidency delivered a stark message: the 20th-century multilateral framework is outdated and unfit for addressing existential threats like cyclones and heatwaves that transcend borders.
India, under Prime Minister Narendra Modi, is actively challenging this broken system. At COP26, Modi urged developed countries to mobilize $1 trillion annually in climate finance, stating, “as we track climate mitigation, we must also track climate finance.” At COP28, he emphasized, “Climate finance and technology are essential to fulfil the hopes of the Global South.” These calls stem from ambiguities that erode trust—whether funds are grants, subsidized loans, or rebranded development projects.
The minister notes that India requires $467 billion by 2030 to decarbonize hard-to-abate sectors, while global annual needs surpass $7 trillion, yet actual flows remain low. Institutions like Multilateral Development Banks (MDBs), the Green Climate Fund (GCF), and the Global Environment Facility (GEF) suffer from weak accountability, concentrated power among wealthy nations, and prohibitive access for developing countries, exacerbated by high borrowing costs and debt burdens.
During its G20 Presidency, India championed MDB reform to extend beyond public lending and mobilize trillions in private capital through tools like guarantees and blended finance, directing flows to adaptation and resilience in vulnerable areas. Domestically, India has developed a draft Climate Finance Taxonomy with clear, scientific criteria for green investments, signaling credibility to attract private funds. Over two-thirds of India's climate finance is domestic, sourced from public budgets and development banks. The country plans to issue additional green bonds worth Rs 10,000 crore in the second half of fiscal year 2025-26, with regulators RBI and SEBI enhancing disclosure norms. To achieve net zero by 2070, India anticipates needing over $10 trillion in investments.
Yadav advocates for three key reforms: transparency and common standards, democratized governance in MDBs, and innovative debt and resilience finance. He invokes the principle of Vasudhaiva Kutumbakam—the world as one family—as the foundation for a fairer global climate framework.