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IMDR’s Journal of Management Development and Research 2022-23

sustainable finance from conventional finance. Banks, businesses, institutional investors, central banks,
international financial organizations, and green funds are the six major types of sustainable financiers.
The banking system possesses vast financial resources that can be used to fund green ventures.
Corporations are among the major investors in climate and other green projects, primarily through CSR
initiatives and green bonds. Pension funds, sovereign wealth funds, and insurance corporations are
examples of institutional investors. Green investment can be financed publicly by central banks. They
can accomplish this through quantitative easing, which entails pumping money into the economy to be
directed toward long-term objectives. Central banks are also in charge of establishing financial
regulations. They can, for example, prevent investors from investing in fossil fuels by imposing
excessive capital requirements. International financial institutions, or IFIs, are multilateral
organizations offering regional or worldwide financing. The world bank and the International Monetary
Fund are examples of global IFIs, whereas regional IFIs include the European Investment Bank, the
Asian Development Bank, and the African Development Bank. IFI may assist scale up green
investment by issuing green bonds, experimenting with novel financing techniques, and lobbying
policymakers to support green initiatives. Finally, green funds are multilateral funds that provide
funding to address issues such as climate change, biodiversity loss, and other environmental concerns.

Importance of Sustainable Finance in Today’s Market: Investing in sustainable finance is more
crucial than ever today. There is currently a profound reconsideration of business's purpose, as well as
the emergence of a genuine and growing commitment to put finance at the service of long-term goals of
sustainable development. This issue has grown even more significant in this moment of economic and
societal turmoil as a result of the COVID-19 outbreak. The goal of green finance is to raise the volume
of financial flows from financial institutions to economic actors engaging in environmental initiatives
and activities to achieve the Sustainable Development Goals. [The 17 UN Sustainable Development
Goals (SDGs) encourage action in important areas for mankind and the earth from 2015 to 2030.] The
desire to prevent environmental harm caused by fossil fuel emissions has led to demands for divestment
from fossil fuel operations and a move toward investing in low-carbon projects and activities that
protect the environment indefinitely (Bergman, 2018; Cleveland and Reibstein, 2015). This request has
both national and international implications. Many countries, including Canada, Japan, Mexico, and the
United Kingdom, have released policy statements to raise citizens' knowledge of the harmful
consequences of fossil fuel emissions on the climate and the hazards associated with climate change.
Countries have joined the Paris Agreement, which is a legally binding international pact on climate
change mitigation (Dimitrov, 2016; Blau, 2017). The Paris Agreement aims to keep global warming to
less than 2 degrees Celsius (Rogelj et al, 2016; Hoegh-Guldberg et al, 2018). Members of the United
Nations Climate Change Conference of the Parties, generally known as (COP26), have pledged to
reduce greenhouse gas emissions. A large number of financial resources must be deployed to
accomplish the Paris Agreement goal and the COP26 mandate (Tollefson, 2018). Green finance or
green financial instruments are terms used to describe these financial resources. To meet the needs of a
modest but developing green economy, the move to 'low carbon' or 'environmentally friendly economic
activity necessitates unique finance (Dikau and Volz, 2021; Lamperti et al, 2019; Sachs et al, 2019a).
As a result, supporters of a green economy have recommended 'Sustainable finance' as a viable
alternative to address the funding needs of individuals, organizations, and governments engaging in
initiatives and activities that sustainably conserve the environment (Mohd and Kaushal, 2018; Falcone
and Sica, 2019; Soundarrajan and Vivek, 2016). The shareholder model has typically been used by
financial and nonfinancial organizations, with profit maximization as the primary goal. The first stage
in sustainable finance (Sustainable Finance 1.0) is for financial institutions to refrain from investing in
enterprises that have extremely significant environmental implications, such as tobacco, cluster bombs,
or whale hunting. Some financial firms are incorporating social and environmental concerns into the
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