India, April 30 -- Regulators across financial markets in the world, including the Reserve Bank of India (RBI), acknowledge that climate-related financial risk is a potential threat to stability. Hence, all financial regulators have a clear interest -- in some cases, even an obligation -- to assess the impacts of the climate crisis on the financial system and incorporate related considerations into their regulatory frameworks to protect regulated entities. However, there is no unanimity of views, exposing the financial system to climate risks and limiting national ambitions on mobilising capital for climate action.

Over the last few years, RBI has used moral persuasion and rhetorical appeal to get regulated entities to consider the clima...