SUSTAINABLE FINANCE · INDIA

India’s Green Bond Market: Big Goals, Small Numbers

Imagine you are building a house and you need $250,000 to complete it — but you can only raise $2,000 from your neighbours. That, in essence, is the story of India’s sustainable finance market right now. The country needs an estimated $250 billion every single year to fund clean energy, flood defences, solar farms, and social infrastructure. Yet in 2025, its so-called “green bond” market — a special type of loan where the money must be spent on environmental or social projects — raised only about $2 billion. That is less than one cent for every dollar needed.

To understand why this gap exists, it helps to know what a green bond actually is. When a company or government needs money, it can issue a bond — essentially a promise to pay back borrowed money with interest. A “green” or “sustainable” label on that bond signals to investors that the funds will only go toward projects like wind farms, clean water systems, or affordable housing. In theory, this label should attract socially conscious investors and let issuers borrow at lower interest rates.

So why is issuance collapsing when the need is so great? S&P Global Ratings points to a practical financial reality: India’s interest rates are high, and when companies try to borrow in foreign currencies (to attract global investors), they face steep “hedging costs” — essentially insurance fees to protect against currency swings between the rupee and the dollar. These extra costs eat up any savings the green label might offer. The bond’s “green premium” disappears, so companies simply borrow money through ordinary bank loans instead. It is not that they do not care about sustainability — it is that the financial incentives no longer make green bonds the smart choice.

S&P suggests one clear solution: targeted tax incentives. If the Indian government gave companies a tax break for issuing green bonds — similar to how some countries treat municipal bonds — it could make the after-tax return attractive again. This would also bring in a wider range of investors beyond the public-sector banks that currently dominate the market. Without such policy support, India’s energy transition will continue to be funded mainly through equity (selling company shares) and conventional bank loans, rather than the specialised green bond market that the country’s climate ambitions arguably require.

Why does India need $250 billion a year for climate finance?

India is the world’s third-largest emitter of greenhouse gases and is also extremely vulnerable to climate impacts — floods, droughts, and rising sea levels affect hundreds of millions of people. Transitioning its massive coal-dependent energy grid to renewables, building climate-resilient infrastructure, and addressing social inequalities in access to clean water and housing all carry enormous costs. The $250 billion figure is S&P Global’s estimate of the annual investment needed to meet India’s climate commitments under international agreements.

What is “hedging” and why does it make green bonds expensive in India?

If an Indian company borrows $100 million from a US investor, it receives dollars but earns revenue in rupees. If the rupee weakens, paying back those dollars becomes more expensive. Hedging is like buying insurance against that risk — you pay a fee to “lock in” an exchange rate. In India, these fees are currently high because of the interest rate gap between the US and India. The cost of hedging can eliminate the financial benefit of issuing a green bond in the first place, making plain domestic bank loans the cheaper option.

Could tax incentives really fix this? Are there working examples?

Yes — several countries have used tax policy to deepen their sustainable debt markets. The United States’ qualified “green” municipal bonds offer tax-exempt interest income to investors, making them willing to accept lower yields. The EU has deployed similar mechanisms through its Green Bond Standard and public guarantees via the European Investment Bank. S&P Global believes India could design analogous instruments — for example, making interest earned on certified green bonds tax-free for domestic investors — to broaden the investor base and reduce effective borrowing costs for issuers.

ENERGY EXPANSION · CARBON ACCOUNTING

Counting Carbon Like a Treasurer Counts Cash

Here is a question most people never think about: when a factory says it “reduced its emissions by 10%,” how do we actually know that is true? Who checked the math? What rules were used? Right now, emissions reporting is a bit like allowing every company to write its own rulebook for its own financial audit — the numbers may be honest, but they are rarely comparable, and they are rarely verified the same way twice.

This is the problem that Carbon Measures, led by CEO Amy Brachio, is trying to solve. The firm’s insight — discussed on the S&P Global “EnergyCents” podcast — is straightforward and elegant: apply the same rigorous principles that accountants use to track money to the way we track greenhouse gas emissions.

Think of it this way: if two factories both claim to have reduced emissions by “10%,” but one measured from a peak year and the other from a low year, and one counted only direct emissions while the other counted its entire supply chain — those “10%” figures are as comparable as apples and boulders. Carbon Measures wants industry to agree on a single set of definitions, just as accountants agree on what counts as “revenue” before filing a financial statement.

The broader coalition Carbon Measures represents is not just philosophically interesting — it reflects a real market shift. As carbon pricing spreads, as the EU’s Carbon Border Adjustment Mechanism starts taxing imports from high-emission countries, and as large asset managers demand credible Scope 1, 2, and 3 emissions data from companies they invest in, the ability to produce auditable carbon accounts will move from a nice-to-have to a licence-to-operate.

How is carbon accounting different from what companies do now?

Most companies currently self-report emissions using voluntary frameworks like the GHG Protocol. These are useful starting points, but they allow significant discretion in methodology — which emission factors to use, which parts of the supply chain to include, how to handle acquisitions. There is no mandatory third-party audit equivalent to a financial audit. Carbon Measures advocates for mandatory, standardised, independently verified carbon accounts — closer to how listed companies must report financial results under securities law.

Why does this matter for investors and family offices?

Reliable carbon data is becoming a prerequisite for institutional capital. The EU’s Sustainable Finance Disclosure Regulation (SFDR) and the SEC’s climate disclosure rules (still evolving) require asset managers to report the carbon intensity of their portfolios. Without credible company-level data, fund managers cannot comply. Families building legacy portfolios with an ESG mandate need to trust that the emissions figures underlying their allocations are real — not marketing. Better carbon accounting directly serves that fiduciary interest.

GLOBAL TRADE · SHIPPING FUELS

Bunker Fuel: The Hidden Engine of World Trade

Almost everything you own — the phone in your pocket, the clothes on your back, the coffee in your cup — travelled part of its journey on a cargo ship. Ships are the circulatory system of the global economy, and their fuel is called bunker fuel: a thick, heavy oil refined from the bottom of the barrel. In May 2026, India’s demand for this fuel surged, and that surge tells us something important about the health of trade flows through the Indian Ocean.

Demand picked up strongly after May 15th at India’s west coast ports — Kochi, Kandla, and Mumbai. The reason was a combination of two simple market forces: better product availability and competitive pricing. When fuel is cheaper and easier to get in India than in nearby ports, ships naturally come to India to fill their tanks.

One particularly interesting shift was the movement of demand away from Colombo, Sri Lanka, toward Kochi in India. Colombo is one of Asia’s major bunkering hubs — ships frequently stop there to refuel on the key east-west trade routes. But in late May, rough weather made operations at Colombo difficult, and Sri Lankan fuel prices were charging a premium above international benchmarks. India stepped in to fill the gap. At Kandla, demand was so strong from container ships and oil tankers that vessels were queuing up, waiting for their turn to take on fuel.

The broader significance here is that bunkering markets are a real-time indicator of trade velocity. When ships are queuing to refuel, it means cargo volumes are high, routes are busy, and the global trading system is under load. This May data suggests that despite geopolitical tensions — including the ongoing Iran-Hormuz risk that has kept oil markets jittery — commercial shipping through the Indian Ocean remains robust. India’s competitive pricing advantage is also a reminder that domestic refinery capacity and government energy policy directly influence global shipping costs.

Is bunker fuel being replaced by cleaner alternatives?

Slowly, yes. The International Maritime Organization (IMO) has set a target for net-zero shipping emissions by 2050. Low-sulphur fuel oil (VLSFO), liquefied natural gas (LNG), methanol, and eventually green ammonia and hydrogen are all being trialled. However, the global fleet still runs overwhelmingly on conventional bunker fuel today, and the infrastructure for alternative fuels remains thin. This is precisely why the IMO Net-Zero Framework — and the Union of Greek Shipowners’ efforts to shape alternative proposals — is so significant. The transition will take decades and will reshape port infrastructure, refinery economics, and ship design globally.

What does the Iran-Hormuz situation have to do with bunker fuel demand?

The Strait of Hormuz is the narrow waterway through which roughly 20% of the world’s traded oil passes. Any threat to close or disrupt it — as Iran has periodically raised — causes oil prices to spike, since supply could be abruptly cut. Higher oil prices directly raise bunker fuel costs, since bunker fuel is an oil product. They also cause some ships to reroute, altering which ports see increased calls. India’s western ports sit near these routes, meaning Hormuz tensions are not just geopolitics — they are a live commercial variable for Indian port operators and fuel suppliers.