Legal Framework For Green Finance And Climate-Responsible Investment In India: Challenges And The Way Forward
- IJLLR Journal
- Jul 14
- 2 min read
Bhushan Madhukar Kathar, Research Scholar, MNLUA, Aurangabad
ABSTRACT
Green finance and climate-responsible investment have emerged as essential tools for achieving sustainable development, addressing climate change, and promoting low-carbon economic growth. In the Indian context, the relevance of green finance is underscored by the country’s vulnerability to climate risks, its ambitious commitments under the Paris Agreement, and the pressing need to balance economic growth with ecological sustainability. This paper explores the evolving legal and regulatory landscape governing green finance and sustainable investment in India, critically analysing the opportunities and identifying the systemic gaps that hinder its full potential. India has made considerable progress by initiating regulatory frameworks through institutions such as the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Ministry of Environment, Forest and Climate Change (MoEFCC). Key instruments like the green bond framework, ESG-related disclosures under the Business Responsibility and Sustainability Reporting (BRSR) system, and the RBI’s guidelines on climate-related financial disclosures represent steps toward institutionalising environmental responsibility in the financial sector. However, the absence of a unified legal definition of green finance, the lack of a national taxonomy, inconsistent ESG standards, and limited coverage of unlisted entities reveal critical regulatory deficiencies. This paper also examines India’s constitutional and judicial perspectives on environmental protection, highlighting the legal underpinnings of sustainability under Articles 21, 48A, and 51A(g). Comparative insights from global jurisdictions, particularly the European Union and China, offer lessons in harmonising regulatory standards and strengthening enforcement. The study concludes by recommending the adoption of a national green finance law, expanded ESG obligations, clearer disclosure norms, and institutional coordination to effectively channel capital into climate-resilient development. In doing so, the paper advocates for a robust and coherent legal framework that not only facilitates green finance but ensures accountability, transparency, and environmental justice in the transition to a sustainable economy.
Keywords: Green Finance, Sustainable Investment, ESG Regulation, Climate-Responsible Capital, Environmental Law in India
