Why Environmental Risk Should Become Mainstream in Infrastructure Investment Decision Making

Posted on
02 September 2021

WWF-India’s report “Integration of Environmental Risks in Infrastructure Investments: A Business Case for Financial Institutions” necessitates the involvement of financial institutions at early stages of an infrastructure project’s life-cycle to identify, assess, and suitably mitigate environmental risks, to catalyse a paradigm shift towards sustainable infrastructure investments in the country. 

Delhi: By 2030, an estimated USD 95 trillion will be spent globally on creating infrastructure assets—doubling the amount of infrastructure that existed in 2012—with a sizeable portion of that investment expected to be made in India. Post COVID-19, government policies focusing on job creation and boosting economies are likely to drive investments in infrastructure, with the Union government allocating INR 20,000 crore to the infrastructure sector in the 2021-2022 budget. WWF-India’s report “Integration of Environmental Risks in Infrastructure Investments: A Business Case for Financial Institutions” highlights the need for financial institutions to mainstream environmental risk assessment in investment decision making to facilitate sustainable infrastructure and security of investments.

“Development cannot happen at the expense of nature anymore”, said Mr. Rajkiran Rai G, Chairman, Indian Banks’ Association and MD & CEO, Union Bank of India, which the current COVID-19 world substantiates. “Utilising diverse tools such as science-based inclusive planning, incorporating nature and climate risk, and resilience analysis into projects, and implementing applicable nature-based solutions to infrastructure projects are methods WWF advocates for shifting the way infrastructure is built and operated by 2030”, he said.
As more public capital will be redirected towards economic recovery to grapple with the losses brought about by COVID-19, governments will be inclined to ease more private investments, putting private financial institutions at the critical juncture of ensuring infrastructure development doesn’t occur at the expense of irreparable degradation of nature. It is therefore imperative for financial institutions to realise the correlation between lack of proper consideration of environmental risk assessment within lending and investment decisions, and their increased exposure to financial risks.

WWF has postulated an ambitious and futuristic, yet actionable pathway for financial institutions to ensure their capital positively impacts the planet’s biodiversity, and provides guidance for safeguarding their investments and the natural world,” said Dr Sejal Worah, Program Director, WWF India. Integrating environmental factors of biodiversity, climate change, and nature loss within mainstream financial analysis makes for prudent business sense, as it will ensure that while institutions preserve and grow their investments, they do so from the unique vantage point of contributing towards making the natural environment more resilient. 
About WWF India
WWF India is committed to creating and demonstrating practical solutions that help conserve India's ecosystems and rich biodiversity. With more than 50 years of conservation journey in the country, WWF India works towards finding science-based and sustainable solutions to address challenges at the interface of development and conservation. WWF India is part of the WWF network, with offices in over 100 countries across the world. WWF India works in many states of India, through our state and field offices. The organisation works in different geographical regions and across thematic areas, including the conservation of key wildlife species and their habitats, management of rivers, wetlands and their ecosystems. On the sustainability side, the focus areas are climate change adaptation, driving sustainable solutions for business and agriculture and empowering local communities as stewards of conservation. We also work in combatting illegal wildlife trade and in bringing environment education to students through outreach and awareness campaigns. http://www.wwfindia.org 
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