Question

Read the following text carefully: 
The growing carbon footprint of industries has put the power and steel sectors in the spotlight as major contributors to the climate crisis. The challenge of climate change can be tackled only by making our industries and businesses follow practices and processes that reduce their carbon footprint. This can be achieved only through green financing. 

Green financing aims to increase the level of financial flows (from banking, micro-credit, insurance, and investment) from the public, private, and not-for-profit sectors toward sustainable development priorities. 
Global green finance has also started targeting Indian companies. Global development finance institutions and funds are ready to offer long-term support (both equity and debt) at affordable rates to projects like solar energy and hydropower. 
Green finance can positively affect environmental quality, economic development, and financial issues that promote the green economy, such as reducing greenhouse gas emissions, improving energy efficiency, or enhancing the organic economy. 
On the basis of the given text and common understanding, answer the following questions:

• (a) State the meaning and objective of green finance.
• (b) Discuss any two benefits of green financing.

Hint:

Green finance is not just an environmental tool — it is an economic strategy that blends ecological sustainability with financial inclusion and industrial innovation.

Answer 1

Meaning and Objective of Green Finance:

Green finance refers to any structured financial activity — a product or service — that is created to ensure a better environmental outcome. It involves mobilizing financial resources towards sustainable and environment-friendly development projects.

The main objective of green finance is to direct investments toward initiatives that reduce the carbon footprint, support renewable energy sources, promote energy efficiency, and help in adapting to or mitigating climate change.

(b) Benefits of Green Financing:

• Environmental Protection and Climate Action: Green financing helps reduce carbon emissions by encouraging projects in renewable energy (like solar and hydropower), cleaner production, and sustainable transportation. It aligns financial growth with ecological sustainability.
• Promotion of Green Economy and Innovation: Green finance fosters technological innovation and research in eco-friendly products and processes. It promotes the development of green industries, which leads to long-term economic benefits like job creation, energy security, and sustainable production systems.