How can businesses benefit from green loans?

Green loans provide numerous advantages to businesses looking to adopt sustainable practices. They are:

• Green loans provide dedicated funding for environmentally friendly and sustainable projects that banks or(Non-banking Financial Companies (NBFCs) may otherwise refrain from financing under general lending guidelines.
• Given their positive social benefits and lower perceived risk, banks or NBFCs may offer preferential pricing and lower interest rates on green loans, reducing overall financing costs.
• Governments offer tax rebates, credits, deductions, etc., for green investments, which can significantly enhance returns for businesses and improve project viability.
• The adoption of green loans signals the applicant's strong environmental commitment. This builds reputation and public trust, leading to greater customer affinity for the applicant's products/services.
• Green-certified buildings and assets funded by such loans command higher market valuations and rental yields owing to the rising demand for sustainable spaces.
• Green loan-funded projects help businesses comply more easily with evolving climate-related regulations in many countries, mitigating future transition risks.
• Environment-friendly projects likely have lower credit risk due to regular impact monitoring and greater oversight of fund utilisation through external reviews.