First Report on Transition Finance

Source-This post on “First Report on Transition Finance” has been created based on the article “Expert Committee on Climate Finance submits First Report on Transition Finance to IFSCA” published in “PIB” on 2 July 2024.

Why in the news?

The Expert Committee on Climate Finance has submitted its first report on Transition Finance.

Transition finance facilitates the decarbonization efforts of high-emitting industries, such as steel, cement, chemicals, aviation, and shipping, with the ultimate goal of reaching net zero.

Efforts to decarbonize high-emitting industries require a collaborative approach. Therefore, this initiative highlighting the need for sustainable finance to achieve global growth, stability, and Bharat’s Net Zero Target by 2070, requiring an estimated USD 10 trillion.

About Expert Committee on Climate Finance

1. It was formed on December 21, 2023

2. Members: It includes experts from policy think tanks, standard setters, consultants, industry, and global financial institutions.

3. Objective: Develop a roadmap for creating a climate finance ecosystem at GIFT IFSC, focusing on Transition Finance and establishing it as a global climate finance hub.

 Highlights of the Report

1. The Report on Transition Finance captures the recommendations by the Expert Committee under three pillars:

i) Scope and definition of Transition Finance

ii) Policy and Regulation

iii) Financial Mechanisms and Instruments

2. Focus Areas:

i) Driving investments in hard-to-abate sectors like steel, cement, shipping, and fertilizers.

ii) Strategic recommendations based on global best practices to enhance GIFT-IFSC’s role in attracting international climate capital.

3. IFSCA will develop a Transition Finance framework based on the report’s recommendations. The Committee will continue its work and draft its next report on transforming GIFT-IFSC into a Climate Finance Hub.

UPSC Syllabus: Indian Economy