With the Ministry of Finance recently releasing India’s Draft Climate Finance Taxonomy, the country has taken a critical step toward strengthening its sustainable finance architecture. In this timely interview with TheCSRUniverse, Manpreet Singh, Partner – ESG Strategy and Transformation at PwC India, shares expert insights on how the taxonomy can drive clarity, consistency, and confidence in green and transition finance.
Singh highlights how the taxonomy’s dual-basket structure and sector-specific pathways offer a pragmatic framework for channeling targeted investments—particularly in hard-to-abate sectors—while respecting India’s developmental priorities. He underscores the taxonomy’s potential to curb greenwashing by setting enforceable definitions for sustainability, aligning India with global standards, and fostering a more transparent ESG ecosystem.
Reflecting on the broader ESG landscape, Singh discusses the evolution of corporate sustainability strategies post-BRSR, common bottlenecks in implementation, and the critical role of data, capacity-building, and regulatory engagement in ensuring meaningful impact.
Excerpts:
Q. How do you see the introduction of India’s Draft Climate Finance Taxonomy contributing to the larger goal of attracting credible and adequate green and transition finance for the country?
A. As a start, the draft taxonomy provides clarity and consistency by defining what constitutes a "green" or "transition" activity. This will help enhance investor confidence while aligning India’s climate finance framework with international standards. We can expect a surge in the issuance of green bonds and other financial instruments, increasing the flow of capital toward sustainable projects.
Furthermore, the inclusion of criteria for transition activities in the draft taxonomy will certainly encourage transition finance. These mechanisms will enable India to establish a robust framework, helping to develop a more mature market for sustainable finance.
Q. One of the persistent challenges in the ESG space is greenwashing. How do you think this taxonomy could help bring greater clarity, accountability, and integrity to sustainable finance in India?
A. In the Indian context, cases of greenwashing can be both intentional and unintentional. A lack of regulatory enforcement, limited sustainability expertise, and pressure to meet business targets hinder corporate citizens’ ability to adopt sustainability practices in their true spirit and communicate them transparently. While we have had a slew of regulations and guidance, this draft taxonomy can substantially help by establishing clear, transparent, and enforceable standards. This framework not only protects investors, consumers, and other key stakeholders but also fosters a more genuine and credible sustainable finance market in India.
Q. India’s economic structure and energy needs are complex and evolving. How well do you think this taxonomy balances the realities of development with the ambition of decarbonization?
A. The aim is to strike a balance between India’s growth and developmental ambitions while enabling pathways for industries to transition toward sustainability. The taxonomy recognizes that not all sectors can progress at the same pace toward the same sustainability goals. It acknowledges the need for gradual improvement rather than demanding immediate transformation, which might be unrealistic given current technological and economic constraints. To this effect, it has included transition activities and introduced enhanced green and transition finance avenues. By providing a clear framework, the taxonomy helps policymakers and regulators encourage green investments without stifling growth. We can expect better collaboration between sectors to share best practices and technological innovations for a holistic approach to decarbonization.
Q. The taxonomy proposes a dual-basket approach and sector-specific pathways. In your view, how might this help in driving targeted investments into hard-to-abate sectors like steel, cement, and power?
A. The draft taxonomy clearly distinguishes between activities that are green (in the present) and activities that are transitioning toward sustainability. This distinction allows hard-to-abate sectors to access transition finance. It also underlines the need for a tailored approach that corresponds to sector-specific business and market realities. Furthermore, this approach aligns with India’s sustainability priorities and international commitments, such as India’s Nationally Determined Contributions (NDCs) under the Paris Agreement. This alignment will help attract both domestic and international investors seeking to support projects that contribute to these global targets.
Q. From a practical standpoint, what do you see as the major challenges in implementing this taxonomy across financial institutions and corporations? And what role should consultation and capacity-building play in the operationalization phase?
A. Challenges related to the interpretation and implementation of the taxonomy in its true spirit, the availability of quality data, and the cost of compliance could pose real hurdles. Additionally, financial institutions and corporations will need to recalibrate their sustainability strategies, manage process changes, and invest in capacity building—both digitally and in terms of human resources. To help address these challenges, consultations and capacity-building efforts focused on developing capabilities, phased implementation with pilot projects, and enabling collaborations among industries, financial institutions, and government agencies will be essential. These measures will play a critical role during the initial adoption phase.
Q. On a broader note, how do you view the evolution of ESG strategies in the Indian corporate landscape over the past few years, especially post the introduction of BRSR and growing investor scrutiny?
A. Over the past few years, most businesses have successfully complied with regulatory requirements and met investor expectations, albeit with varying levels of enthusiasm and commitment. Many companies have also moved beyond these fundamental drivers to leverage ESG principles—either to prevent value erosion or to create new value by integrating sustainability into their core operations. Globally, we are witnessing adjustments in the regulatory landscape. Meanwhile, Indian policymakers and central agencies remain steadfast in their efforts to enhance accountability through detailed reporting and a pragmatic sectoral approach. They are also driving initiatives in green finance and market mechanisms, which are crucial enablers of sustainable growth. Similarly, businesses are increasingly focused on improving the quality of data by digitizing processes and addressing specific areas such as waste management, water conservation, biodiversity, extended producer responsibility, and social impact. This often involves building or acquiring deep technical expertise. While programs aimed at decarbonization and resource efficiency remain high priorities, emerging themes such as climate risk assessment and adaptation are gaining more attention, with businesses delving deeper into these complex issues.
Q. Despite growing awareness, many companies still struggle to move from ESG intent to measurable impact. What are some key bottlenecks or systemic challenges you see in the Indian context?
A. The availability of quality data that is effectively aligned with frameworks, lack of expertise and resources, and the complexity of the value chain are three major challenges. At times, the organization’s culture and limited stakeholder engagement can also act as dampeners.
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