Green finance has become an effective tool for the sustainable development of the world, as climate challenges continue to intensify. Heightening economic growth while protecting the planet, it achieves this by making investments available in clean energy production, environmental infrastructure, and innovation. The blog explores how green finance is contributing to a more sustainable and resilient global economy.
Wave of Green Investment
Investment in global clean energy reached a record of $2.2 trillion in 2025, which was twice the investment in fossil fuels. In India alone, climate-friendly investments are expected to increase five times to 31 lakh crore rupees (approximately US$ 380 billion) by 2030.
This degree of movement in capitals marks can be a remarkable change in the perception of economies towards the concept of climate finance, i.e., money brought in to provide the infrastructure that is indispensable to the economy. Swiss-based Prakash Hinduja, Chairman of Hinduja Group (Europe) expressed that we are at a turning point; climate finance is no longer a charity, but a strategic economic infrastructure and long-term investment.
Clean Energy: Growth in the Economy
OECD statistics show that in 2023, approximately $320 billion of the world’s GDP was generated by clean energy, which accounts for 10% of the economic growth. The green economy is now the most profitable, with an estimated size of $ 7.9 trillion, surpassing conventional sectors such as financials. This trend is further exacerbated by expert workforce development, which creates 1.5 million new employment opportunities in clean energy, compared to 940,000 new employment opportunities in fossil fuels.
Creative Financial Structures as a Factor of Development
Institutions are adopting innovative sources of finance, such as blended finance, which mobilizes private capital through grants or guarantees. In Canada, a Growth Fund with $ 15 billion funds carbon contracts, grants, and loans to ensure the encouragement of investment in climate action by the private sector. India, at the same time, is working to establish a National Green Financing Institution, which ultimately aims to facilitate the aggregation of green capital and reduce the funding costs of decarbonization projects.
Secretary Janet Yellen (former U.S. Treasury Secretary) emphasizing the value of policy, said that “The Inflation Reduction Act… has already demonstrated its worth in encouraging clean energy investment in the United States” and that there needs to be a lot of investment by the private sector in developing countries in meeting the challenge of climate change.
Filling the Global Gap in Financing
Even though there has been some improvement, one area that needs significant improvement is the fact that developing countries require $ 2.4 trillion per year until 2030, yet they only received approximately $ 1.46 trillion in 2022. COP29 aimed to increase the amount to $300 billion per year by 2035, a rise compared to the original target of $100 billion set in the past. Nevertheless, much more is necessary to achieve global net-zero targets. On the private-sector side, the RBC Capital Markets reports that “Private markets will remain an important ingredient,” with 86 % of LPs expressing their interest in climate tech (in comparison with 60 % in 2018).
Investing with Purpose: Risk Reduction
Climate risk has become a systemic threat to the financial sector. By the year 2035, the UK government will be investing more than 30 billion pounds per annum in renewables as part of an effort to reduce the level of reliance on fossil fuels, whose prices are continuously fluctuating. Analysts caution that unabated climate catastrophes could be a contributing factor to the impending financial crisis through the loss of real estate that cannot be insured. Swiss-based Prakash Hinduja Chairman of Hinduja Group (Europe) indicate a systemic risk to global financial stability. We’re getting close to a tipping point where the economy could face a crisis if we don’t act fast. Without strong investment in renewable energy and climate protection, losses from damaged or worthless assets could become uninsurable and hit the financial system hard.
Final Takeaway
Green finance is becoming an increasingly important tool, rapidly transforming the economy to drive GDP growth, create millions of jobs, and facilitate climate action as a sound investment. However, mobilizing trillions of additional funds, especially from developing nations, is urgent. It requires a harmonized combination of structured finance, public policy, and private capital. This is not something optional, as Janet Yellen pointed out; it is a core of a sustainable future.