Given their ability to influence developers and other value chain actors, financiers have a key role to play in enabling a just transition. While they are showing some signs of climate awareness, it is often limited to meeting ESG requirements. Knowledge of financial and technical solutions, and the ability to implement and monitor them remains a challenge.
Fiscal regulators have an important role to play. In the past year, the Reserve Bank of India and the Securities and Exchange Board of India have come forward with climate physical risk and ESG disclosure requirements and nudged financial sector entities to undertake climate stress tests. While these are welcome steps, one needs to be mindful that the risk mitigation efforts undertaken by financial sector players are likely to have a disproportionate impact on incomes and livelihoods of vulnerable segments of the population with potentially higher interest rates, increased costs of climate-proofing, and higher insurance premiums.
The urban poor are among the groups that are particularly at risk from climate change, despite contributing minimally to its causes. It is estimated that climate risks could increase India’s national poverty rate by 3.5 percent, leading to an additional 50 million people falling into poverty by 2040. Climate change poses risks to nutrition, health, education, livelihoods, housing, WASH, and financial safety nets. However, existing programmes often fail to fully address the interconnected ways in which climate challenges affect their lives. Adaptation and resilience solutions for the urban poor should span across various sectors and avoid isolated and short-term thinking.
India’s farmers too have been severely affected by climate change in recent years, and these effects are expected to worsen. Small-holder farmers, comprising 78 percent, produce 41 percent of the country’s food grains. Farmers face challenges such as water scarcity and the threat of unsustainable agricultural practices. The increasing frequency of extreme weather events, such as droughts and floods, also pose significant challenges, potentially causing a 20 to 25 percent decline in medium-term incomes if not addressed promptly. These challenges, if left unaddressed, could further endanger the future of Indian agriculture and lead to increased climate-linked rural-to-urban displacement.
Any climate-smart intervention needs to consider the interests of these two groups front and centre, with affordable and scalable solutions. It is imperative to mitigate their losses if we wish to achieve a people-centred transition to a green era. Ensuring these groups can prosper in a green era should be as much of a priority as tackling climate change.
First Published: Jul 05, 2024, 12:30
Subscribe Now