Committee on sustainable finance submits suggestions to IFSCA

Source: The post is based on the article “Committee on sustainable finance submits suggestions to IFSCA” published in The Indian Express on 5^th October 2022.

What is the News?

A “committee of experts on sustainable finance” was constituted by International Financial Services Centres Authority (IFSCA) at the GIFT City. Now, the committee has submitted its suggestions.

What is Sustainable Finance?

It refers to any form of financial service integrating environmental, social and governance(ESG) criteria into the business or investment decisions for the lasting benefit of both clients and society at large.

About the committee of experts on sustainable finance

Headed by: CK Mishra, former secretary, Union Ministry of Environment, Forest and Climate Change

Major focus: The main focus of the committee was to align the IFSC regulations with international best practices.

The committee also explored ways in which capital flows through IFSC can be enhanced and support the development of innovative financial products in the area of green and sustainable finance.

What are the major recommendations of the committee?

Significance of the MSME: Considering the significance of the MSME sector in the economic development of the country, the committee also proposed setting up of a dedicated MSME platform for sustainable lending.

Some other important recommendations include a) Developing a voluntary carbon market, b) A framework for transition bonds, c) Enabling de-risking mechanisms, d) Promoting a regulatory sandbox for green fintech and e) Facilitating the creation of a global climate alliance among others.

The committee also recommended facilitating the use of innovative instruments such as catastrophe bonds, municipal bonds, green securitisation, and blended finance among others.