This study identifies eleven key barriers to green financing, emphasizing that global-level obstacles, political constraints, and knowledge gaps significantly hinder adoption, with the risk of greenwashing being the most critical challenge; it advocates for standardized definitions and strengthened regulations to enhance green finance efforts and achieve environmental sustainability.
Authors
Ravita Kharb, Department of Management Studies, Netaji Subhas University of Technology (NSUT), New Delhi, Dwarka, 11078, India
Charu Shri, Department of Commerce, Shri Ram College of Commerce, New Delhi, India
Pragati Singh, Department of Management Studies, Netaji Subhas University of Technology (NSUT), New Delhi, Dwarka, 11078, India
Shabani Bhatia, Assistant Professor, Jindal Global Business School, O.P Jindal Global University, Sonipat, Haryana, India
Neha Saini, Faculty of Management Studies, University of Delhi, New Delhi, India
Summary
Green financing has become crucial for transitioning to a more resilient and sustainable economy, for tackling critical environmental issues and for maintaining the stability of present and future generations. There are various factors that influence the adoption of green financing to achieve environmental sustainability. Despite of substantial research on green finance, there is a dearth of research to pinpoint barriers to green financing.
The objective of the current study is to identify, determine, and build an empirical model that evaluates the interaction among barriers affecting green finance adoption in any economy to achieve environmental sustainability. Against such backdrops, the authors perform a comprehensive literature review followed by interviews with subject experts and identify eleven key barriers to green financing. These are subsequently examined and a hierarchical relationship between the barriers is established using total interpretive structural modelling (TISM). Further, Matrice d’impacts croisés multiplication appliquée á un classement (MICMAC) analysis is performed to analyse the barriers based on the driving and dependency power.
Findings show that global-level barriers, political constraints, uncertain economic conditions, legislative structure, and dearth of knowledge are the strategic factors with high driving power and low dependency that have a greater impact on adopting green financing. The most significant and performance-level obstacle to attaining environmental sustainability is discovered to be the risk of greenwashing. Standardised definitions and norms for green financing need to be established globally to reduce the risk of greenwashing. Strengthening regulatory enforcement and monitoring procedures is necessary to mitigate the possibility of greenwashing risk. The outcomes aid in the establishment of a strong framework for the adoption of green financing by governments, policymakers, and stakeholders to attain environmental sustainability.
Published in: Environment, Development and Sustainability
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