How NABARD accelerates green finance
India grapples with a pressing climate dichotomy – more than two-thirds of its districts will face substantial climate risks by 2030, imperilling over 30 per cent of the country’s GDP, based on various estimates by India Climate Collaborative, Council on Energy, Environment and Water (CEEW), World Resources Institute (WRI) and the Boston Consulting Group. Simultaneously, for achieving India’s Nationally Determined Contributions (NDCs), As outlined by the Climate Policy Institute, India requires an additional $100-150 billion in annual funding, hindering the scaling up of low carbon and climate positive interventions. Several efforts are in place; however, they are predominantly targeted towards the mitigation of greenhouse gases within sectors like power, industry, mobility and infrastructure. There is an urgent need to build the right bankable solutions to drive greater adaptation and resilience.
Rural India stands at the frontline of climate change, bearing the brunt of its adverse effects and missing out on critical financing support. India has to navigate financing hurdles within the agriculture and rural sectors, to provide for an inclusive and sustainable growth pathway and support the fulfilment of the country’s NDCs.
The current landscape therefore demands a paradigm shift towards green finance – an approach that structures the right financing mechanisms, supports bankability of key solutions, empowers last mile institutions to deploy this money and builds capabilities of rural communities, farmer producer organisations (FPOs), cooperatives and federations towards greater resilience.
At NABARD, India’s foremost development finance institution, we acknowledge our pivotal role in addressing the structural challenges that exist. NABARD is the key institution engaged in financing and enabling the rural ecosystem – through its work with the rural financial institutions, self-help groups (SHGs), FPOs and governments.
NABARD is further committed to unlock green financing, which advances inclusive environmental and social progress and is actively recalibrating strategies to propel climate-related solutions in rural areas. The opportunities for climate-resilient practices within agriculture and allied sectors are vast. From leveraging renewable energy sources to promoting water conservation and sustainable agricultural practices, forest conservation and restoration, agro-forestry, wetland restoration or dairy – each avenue presents a pathway towards a more resilient future.
Across the country, over many years, NABARD has spearheaded initiatives showcasing successful financing models that marry climate adaptation with economic viability. These models span from promoting community-based watershed management programmes for enabling environmentally-sustainable livelihoods to tribals and indigenous people to facilitating the adoption of climate-resilient crop varieties.
As the Direct Access Entity/National Implementing Entity for dedicated Climate Funds such as Green Climate Fund (GCF), Adaptation Fund and National Adaptation Fund for Climate Change, NABARD has already supported about 40 projects across India in diverse sectors. These endeavours have not only mitigated the impacts of climate change but also augmented the resilience of rural communities.
As India enters the transformative amrit kaal, NABARD is poised to be a catalyst in the fight against climate change. Our unwavering commitment to financing sustainable projects aligns with our aspiration to leave a profound legacy – a healthier, more prosperous and more sustainable India. By nurturing resilient rural communities today, we sow the seeds for a brighter and more equitable tomorrow. We have set ourselves up in these changing times, with a specialised Department of Climate Action and Sustainability. Looking ahead, our vision is resolute. NABARD aims to deepen its engagement by focussing on:
• providing for, the foundational ecosystem and enabling elements around green taxonomy, climate data availability, project information and impacts, etc;
• designing the right instruments, basis on our deep understanding of rural and agro sectors; and
• enabling mechanisms for the last mile financing system to absorb this financing via green literacy, capability build, carbon markets framework support, etc.
Each of our focus areas helps address on ground structural challenges.
Green taxonomy: We are looking forward to forging strategic alliances building-up on our positioning as a credible, efficient and robust financial intermediary. NABARD aims to plug the significant rural and adaptation financing gap, by engaging with critical players and expanding the foundational ecosystem.
We have embarked upon a journey to create a first ever green taxonomy that is holistic, that covers both adaptation and mitigation elements, highlights green tagging opportunities in the agriculture and rural segments, etc. The green taxonomy of NABARD builds up from India’s ongoing plan, globally relevant and recognised taxonomies across EU, ASEAN, etc, and also from a retail markets perspective covering CBI and ICMA.
Further, we are focussing on areas like greening the dairy and poultry value chains, climate smart approaches for crops including rice, wheat, cotton, sugarcane, etc, productive use of solar applications in combating food loss and waste, solar rooftops and cold chains, advancing electric mobility in rural and underserviced areas, to design the right kind of financing instruments that incorporate demand aggregation and market transformation approaches, extend capital to convert upfront capex into opex for farm beneficiaries exploring pre-financing of carbon credits for projects within the agro-forestry and ecosystem restoration spaces.
We are additionally priming ourselves to support the implementation and roll-out of key government programmes like National Mission on Sustainable Agriculture, Soil Health, Food-basket transition to include millets, PM kusum, etc, to empower renewable solutions like solar pumps etc. for farm energy and water management, regenerative agricultural practices and solutions, etc. Additionally, we are closely engaging with the Ministry of Agriculture and Farmers’ Welfare on national framework on voluntary carbon markets, to drive innovative financing across the board.
Concurrently, we are also developing a scorecard to objectively measure the impact of these interventions and thereby ensure that the outcomes achieved are in sync with what was ideally desired.
Further, we are looking at strategic collaborations with diverse stakeholders, including government bodies, NGOs, and private entities, to amplify our collective impact and build capabilities in creating a climate-resilient rural India. As our first step in this regard, we are looking at rolling out a climate data warehouse that helps bringing multiple data stacks of impact, solutions, technologies, commercial viability, bankability and financing structures, climate finance possibilities and other aspects.
This builds upon our DiCRA (Data in Climate Resilient Agriculture) initiative, partnering with United Nations Development Programme (UNDP) to democratise climate risk data and information, providing open and ready access of critical geospatial data to rural communities. This will further flow into and be the basis of a planned green literacy roll-out that we intend to offer and augment the last mile financing system including Regional Rural Banks, Co-operative banks, NBFCs and so on.
In conclusion, NABARD stands firm in its mission to accelerate green finance and drive climate resilience in rural India. Together, we can forge a path towards a future where sustainability and prosperity intertwine, ensuring a legacy of abundance and resilience for generations to come. Yes, we in NABARD, have always dared to dream, backed by the fervent desire to deliver. As NABARD embraces its revamped climate-oriented strategy, we invite all to partner with us, and build climate resilience for our rural community from the frontlines and contribute to nation-building, while also moving that bit closer to ushering rural prosperity.