India’s net zero target by 2070 demands $10–$12.5 trillion in investment over the next few decades, alongside annual climate adaptation costs of about 2.5% of GDP by 2030. Mobilising such vast resources is essential for a successful green transition.
Pension funds, managing around $600 billion and growing 10% annually, are largely invested in government securities but remain underutilised for climate projects. Their long-term investment horizon makes them ideal for funding renewable energy, clean transport, and adaptation projects through instruments like InVITs, AIFs, and corporate bonds with credit enhancement.
With patient capital and low-risk preferences, pension funds are well-suited for sustainable finance. However, climate change poses systemic risks, requiring integration of climate risk assessments into investment strategies. While global regulations on climate risk disclosures for pension funds are advancing, India’s framework remains limited. Strengthening regulatory guidance and raising beneficiary awareness could unlock pension funds as a powerful tool for financing India’s green future.
