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Climate Finance Must get Beyond Greenwashing | PWOnlyIAS 2023

Subject: GS-03: Environment and Ecology

Context:

  • As we move from UN Climate Week to CoP-28, we need to stop ‘greenwishing’ and ‘greenwashing’ and start thinking about the instruments that will enable the private sector to channel more capital toward climate resilience and sustainable development.

About “The Three Greens”: Greenwashing, Greenwishing, and Greenhushing

  • Greenwashing:
      • Greenwashing refers to the deceptive practice of making false or exaggerated claims about the environmental friendliness of a company’s products, services, or practices.
      • For example: Starbucks introduces straw-less lid citing it will help reduce environmental footprint. However, it contained more plastic than the old lid and straw combined together.
  • Greenwishing:
      • It refers to organisations expressing a desire to be more environmentally responsible without taking concrete actions to achieve those goals.
      • It’s like making a wish for sustainability without any tangible actions directed in the required direction.
  • Greenhushing:
    • It implies a situation where an organisation intentionally downplays their positive environmental achievements.
    • It might involve not publicising sustainable practices for various reasons, such as modesty, fear of criticism, or reducing external communication.

Private Investment, Sustainable Development, and the Challenge of Greenwashing:

  • The sensible way to construct a profitable, long-term, climate-aligned, widely accessible investment strategy is to develop a diversified portfolio of assets that directly or indirectly support climate financing while avoiding the pitfalls of greenwashing.
  • Climate-Resilient Infrastructure: Carefully selected Real Estate Investment Trusts (REITs) and exposure to greenfield developments through exchange traded funds are two ways to secure reliable returns from climate-adaptation efforts.
    • Such investments offer broader economic and societal benefits, including productivity growth, job creation and the provision of employment and housing for migrating populations.
  • Green Commodities and the Challenge of Avoiding Greenwashing: An orderly transition to a more resilient future requires massive investments in the metals and critical minerals used in renewable energy and electric vehicles (EVs).
    • To avoid any ‘greenflation’ (inflation caused by decarbonization efforts) and supply bottlenecks, we need to boost production and lower the cost of securing these commodities.
  • Climate-Aligned Portfolio: It should include assets that provide a hedge against inflation and geo-economic risks, such as inflation-indexed sovereign bonds and gold.

News Source: Mint

 

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Quick Revise Now !
AVAILABLE FOR DOWNLOAD SOON
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Comprehensive coverage with a concise format
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हिंदी में भी उपलब्ध
Quick Revise Now !
UDAAN PRELIMS WALLAH
Comprehensive coverage with a concise format
Integration of PYQ within the booklet
Designed as per recent trends of Prelims questions
हिंदी में भी उपलब्ध

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