Cloud over climate finance: Experts call for unified framework to unlock concessional capital

The climate crisis has shifted from a looming threat to an immediate challenge, already impacting GDP growth and economic stability across the globe. At the inaugural BT India’s Most Sustainable Companies Summit & Awards, a panel of experts underscored the urgent need to unlock climate financing—particularly from multilateral institutions—to accelerate sustainable development in emerging economies like India.

The panel highlighted that multilateral institutions such as the World Bank and regional development banks are sitting on sizeable pools of concessional capital—low-cost, long-term financing earmarked for development goals. However, these institutions are reluctant to disburse funds without robust regulatory frameworks that ensure transparent and appropriate use of proceeds.

“Multilateral institutions are sitting on sizeable concessional capital. What they are looking for is a framework that gives them confidence the proceeds will be guaranteed through regulatory measures,” said Meyyappan Nagappan, Partner at Trilegal. While he acknowledged that there is strong momentum on India’s legal and regulatory front, he added, “Government financing alone won’t be enough. We need blended finance mechanisms because multilaterals are going to play a key role.”

Another key concern raised was India’s fragmented climate finance ecosystem. While five ministries and several regulators—including the Ministry of Environment, Ministry of Renewable Energy, NITI Aayog, Ministry of Finance, RBI, and SEBI—are involved in climate-related initiatives, there is no centralised authority tying it all together.

“There is no golden thread that runs through the system,” noted Amit Kapur, Partner at JSA. He called for a comprehensive “policy thought piece” to unify these disparate efforts. “We need to incentivise risk mitigation, credit-enhance the investment proposition, and structure financing in a way that pulls in climate capital. The money is there—it’s the structure that’s missing.”

Another point that was discussed was the mismatch between financial promises and delivery, particularly from developed nations at global forums like COP. As one panellist put it: “Why do people lend money? There are two reasons—returns must outweigh risks, and sometimes, it’s goodwill. But we’ve seen this goodwill fall short,” said Srinath Sridharan, Corporate Advisor.

The panel agreed that while domestic capital is available, attracting it—especially for high-risk, new-age projects—requires trust, confidence, and legally guaranteed structures.

“Some of these projects are inherently risky,” he said. “We need de-risked finance models, possibly with government front-loading to create early momentum. Blended finance and embedded guarantees can help bridge the trust gap and unlock the real potential of climate capital,” Sridharan added.