Opinion It’s time to fix climate finance. India has shown the way
For decades, this ambiguity has undermined trust. Is it a grant, a subsidised loan, or merely a rebranded development project?
At COP26, PM Modi pressed developed countries to mobilise $1 trillion annually, insisting, “as we track climate mitigation, we must also track climate finance”. 
India’s G20 Presidency delivered a clear message to the world: The 20th-century multilateral framework is no longer fit for purpose. Nowhere is this failure more evident, or more dangerous, than in the architecture of global climate finance. The need for multilateralism is non-negotiable. Existential threats, from cyclones to heatwaves, do not respect national borders. We require that this system acts as an equaliser; a platform for solidarity, shared technology, and protection of the most vulnerable. Instead of such a partnership, the Global South has been met with hollow promises, opaque accounting, and a system that prioritises creditors over climate. This system has been slow, exclusive, and unaccountable.
This is why, under Prime Minister Narendra Modi, India is challenging this broken system. As we accelerate our clean energy transition, we ask: What precisely counts as climate finance? Who defines it? And how do we ensure it delivers on promises?
At COP26, PM Modi pressed developed countries to mobilise $1 trillion annually, insisting, “as we track climate mitigation, we must also track climate finance”. At COP28, he stated: “Climate finance and technology are essential to fulfil the hopes of the Global South”. For decades, this ambiguity has undermined trust. Is it a grant, a subsidised loan, or merely a rebranded development project? This fog hampers productive investment critical to climate action. India alone requires $467 billion by 2030 to decarbonise hard-to-abate sectors. Globally, annual needs exceed $7 trillion, yet flows remain stubbornly low.
The anchors of the current system, the Multilateral Development Banks (MDBs), Green Climate Fund (GCF) and the Global Environment Facility (GEF), are failing to meet this moment. First, accountability is weak, as is transparency. Second, power remains concentrated. International financial institutions are still governed by structures that afford disproportionate influence to a handful of wealthy nations. Third, access is prohibitive. For developing countries, complex application processes mean critical funds are slow to arrive, if at all. This is compounded by steep borrowing costs and mounting debt, forcing nations to choose between paying creditors and protecting their populations.
This is precisely why India, during its historic G20 Presidency, championed MDB reform.
The MDBs’ role must be guided by their fundamental objective to support developing nations. Their functions must extend beyond lending public money to strategically mobilise the trillions in private capital required.
Today, private capital flows to where risk is lowest and profit is highest. It bypasses the difficult, urgent needs of adaptation, resilience, and Loss and Damage in the most vulnerable nations. By using tools like guarantees or blended finance, MDBs “de-risk” private capital into the sectors and regions that need it most.
As we push for global reform, we are building the future we demand from others. India’s draft Climate Finance Taxonomy is a substantive intervention. It proposes clear, scientific criteria for “green” or “climate-aligned” investment, guiding both public planning and private capital. This creates a stable playing field and signals that India’s green market is built on credibility.
Today, over two-thirds of climate finance sourced in India is domestic, through public budgets, development banks, and historic sovereign green bond issuances. These bonds have seen a surging global appetite, and India will mobilise an additional Rs 10,000 crore via green bonds in the second half of fiscal year 2025-26. Our regulators, the RBI and SEBI, are tailoring disclosure and accountability norms for green instruments. This comprehensive approach is essential as India readies for more than $10 trillion in investment to reach net zero by 2070.
India’s journey shows what pragmatic leadership can build. Global architecture demands the same foundation, built on three essential reforms: Transparency and common standards; democratised governance across MDBs and, lastly, innovative debt and resilience finance.
The international community must re-engineer global frameworks to be fairer and more effective. Only then can the principle of Vasudhaiva Kutumbakam — the world as one family — be realised as the organising philosophy of our shared climate future.
The writer is Union Minister for Environment, Forest & Climate Change
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