India’s requirement for climate finance is large and growing. It is estimated that to achieve India’s Nationally Determined Contributions (NDCs) under the Paris Agreement, the country requires approximately US$2.5 trillion from 2015 to 2030 or roughly US$170 billion per year. The country’s estimated green financing requirement will be at least 2.5 percent of GDP annually until 2030.
Public sector funds are not enough to meet this massive financing requirement, therefore, India must accelerate its efforts to empower the private sector. Major corporations and financial institutions now perceive the climate transition not solely as a matter of morality and ethics, but also as a unique economic opportunity—in 2022, nearly 450 banks, insurers, and investors, collectively representing US$130 trillion in assets and 40 percent of the world’s private capital, committed to making their portfolios climate neutral by 2050. While ambitious commitments have been made in terms of financing climate action, accessing this pool of capital remains a challenge.
Neufin was founded in December 2021 with the aim of bridging this gap and ensuring that capital was not a constraint in the greening of the economy. We are building a technology platform for businesses to simplify and streamline access to green financing. Our mission is to become the platform that powers the world’s transition to zero emissions. We aim to address the US$ 10 trillion/year gap in climate finance globally through innovative delivery of financial products across key stressed geographies—India, South East Asia, the Middle East, and Africa.
Neufin was founded in December 2021 with the aim of bridging this gap and ensuring that capital was not a constraint in the greening of the economy.
To solve this problem, we are taking a step-wise approach starting with dismantling the complexities that exist in the carbon markets. The role that carbon markets can play in a country’s decarbonisation journey is becoming increasingly evident as businesses, organisations, and governments grapple with striking a balance between emissions reduction and economic growth. Carbon markets provide a mechanism to incentivise and fund emission reduction projects and offer cost-effective solutions that could potentially save India from incurring a loss of US$ 35 trillion due to unmitigated climate change over the next 50 years.
However, participation in carbon markets requires the ability to navigate through a complex system with multiple stakeholders and an extensive monitoring process that makes generating and transacting credits a tedious task. The ecosystem is particularly hard to navigate for small- and medium-sized enterprises with limited expertise and resources looking to finance their decarbonisation journey through the carbon market. We are working to simplify the voluntary carbon market for all stakeholders involved with our suite of innovative products that act as a single point of access for all carbon market requirements.
The ecosystem is particularly hard to navigate for small- and medium-sized enterprises with limited expertise and resources looking to finance their decarbonisation journey through the carbon market.
Our tech-enabled platform provides user-friendly products and comprehensive support across the project lifecycle with a concerted focus on three aspects—trust, convenience, and transparency. Our products include a Carbon Project Eligibility Checker, a free and user-friendly tool that allows project developers to instantly assess if their green projects qualify to earn carbon credits and a Carbon Price Tracker that compiles data from various credible sources and bridges the information gap in the space by making average carbon credit price available freely. Furthermore, Carbon Market Access is a platform that connects project developers to buyers all over the world at the click of a button and is designed to maximise value and revenue for businesses. These products reinforce our commitment to making the market more transparent and accessible.
We work exclusively with businesses looking to decarbonise their operations or expand their pre-existing green initiatives by facilitating access to capital through carbon financing, and debt and equity markets. We operate across a wide spectrum of sectors, including waste management, plastics, sustainable agriculture, and electric mobility, catering to businesses of all sizes, from NGOs and MSMEs to larger corporations. Some of our notable clients include the National Dairy Development Board (NDDB Mrida), EID Parry, and GPS Renewables.
In addition to creating the infrastructure to support the deployment of climate finance, Neufin also provides an ecosystem to help businesses accelerate project execution timelines through connections with the right advisors, project planners, and vendors. This ensures that businesses find a one-stop solution for their sustainability projects. We commit to meticulously understanding their business operations and requirements, a crucial underpinning in our ability to identify the right financial partner(s) for their distinctive needs.
Furthermore, we aim to enhance participation and transparency in carbon markets for businesses and financiers by offering market intelligence and advisory solutions, facilitating more informed and responsible carbon trading. Our team of experts help businesses and financiers make informed decisions that simplify the understanding of carbon markets. We cover questions ranging from project eligibility and commercial potential of a project to a more nuanced sectoral, pricing and policy trend analysis. We are also committed to building intelligent products that democratise carbon financing—and our Carbon Eligibility Checker, Carbon Price Tracker, and Market Access tools are a reflection of this commitment.
PnP and its work help empower the community and enhance their chances of securing long-term employment and livelihoods.
At the same time, we endeavour to make a conscientious effort to partner with organisations that are dedicated to delivering a tangible societal impact on the ground. One such example is Partners in Prosperity (PnP)—an NGO that works to empower rural communities by introducing methods that encourage environmental sustainability and economic stability in agricultural practices. PnP, with the help of local communities, develops projects across the domains of agroforestry, local infrastructure development, and renewable energy, among several others. It then leverages the carbon market, through the sale of credits, to generate revenue from the projects, and uses the revenue to fuel a range of initiatives such as schooling and livelihood support, capacity building, and skill development. Thus, PnP and its work help empower the community and enhance their chances of securing long-term employment and livelihoods.
It is, however, important to acknowledge that while carbon financing can play a valuable role in advancing climate action, it is insufficient to keep up with the necessary pace of capital deployment required to address the global climate crisis. Acknowledging the multi-trillion-dollar financing gap, multiple financial institutions have made commitments to expand and diversify their green lending portfolio. These commitments are supported by policy measures that are prompting banks to make deliberate efforts to finance climate-positive projects.
To this end, debt markets can play a catalytic role in financing adaptation and mitigation for climate change but have remained largely untapped when it comes to financing green initiatives. However, their potential is immense. When debt financing incorporates social and environmental performance criteria, it ensures that projects align with sustainability principles, promoting job creation, social equity, and community well-being. Similarly, impact investing for climate action can drive a positive change while considering social and environmental outcomes. We aim to build pathways that would enable capital providers to deploy funds with ease to support projects that directly benefit communities, such as renewable energy infrastructure and climate resilience measures.
Debt markets can play a catalytic role in financing adaptation and mitigation for climate change but have remained largely untapped when it comes to financing green initiatives.
By helping financiers direct their capital towards projects and companies that generate measurable and beneficial impact alongside financial returns, Neufin’s platform can accelerate progress towards multiple overarching social goals such as job creation, community development, and social equity. We hope to play a vital role by leveraging our innovative solutions and products to enhance the well-being of people and foster inclusive economic growth.
One challenge that needs to be overcome is that Indian banks are wary of accepting carbon credits as collateral against commercial loans. This can be attributed to a limited understanding of the carbon markets as well as a lack of push from the government to, thus far, value and develop an understanding of carbon markets. The government can, therefore, enact supportive policies and regulations that recognise carbon credits as an eligible form of collateral and provide clarity on their treatment in loan agreements. Furthermore, frameworks can be created to incorporate carbon credits into the lending practices of financial institutions, such as developing standardised methodologies for assessing creditworthiness and establishing appropriate loan-to-value ratios.
There is also a lack of awareness and understanding among businesses about the potential benefits of transitioning to green practices and accessing climate finance. Even the businesses that are aware have limited access to affordable and tailored financial products for green projects, hindering the uptake of sustainability initiatives. Inadequate coordination and collaboration among financiers, government agencies, and businesses further contribute to the disjointed climate financing landscape, making it challenging to bridge the gap effectively. Furthermore, the regulatory framework governing climate finance is currently lacking. While financial markets are increasingly making voluntary commitments to support climate action, it is important that the government guides the trajectory of such investments and sets up systems to address greenwashing concerns.
The government can, therefore, enact supportive policies and regulations that recognise carbon credits as an eligible form of collateral and provide clarity on their treatment in loan agreements.
Moreover, Indian regulation has, so far, been slow-paced in mandating banks to make in-depth climate-related financial disclosures, compared to its Western counterparts in Europe and North America. But beneath the lack of regulation is a more fundamental barrier—despite the conversation around climate action evolving for decades, India still does not have a green taxonomy. Developing this framework would be hugely beneficial for private actors to define green investments, make more informed choices, enable market transparency, and create robust standards to tackle greenwashing.
Today, there are many young companies committed to contributing to the world’s climate mitigation and adaptation story; Neufin being one of them. We believe that the confluence of technology, policy, and finance is critical for encouraging innovative approaches for solving perhaps what is the most cardinal problem of our times. Such a collaborative approach would require financial institutions and the government to overcome their resistance to engaging with startups. It is only then that we can expect to see innovation at scale, unlocking positive environmental and social outcomes for both India and its citizens.
Rahool Gadkari is the Co- Founder of Neufin.
Rushil Noronha is the Co- Founder of Neufin.
Arshiya Bhutani works in the Research and Communication Department at Neufin.
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Arshiya Bhutani works in the Research and Communication Department at Neufin. ...
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