Department of Business Administration Master’s Programme in Finance, 120 hp
CHALLENGES FOR
GREEN FINANCE IN INDIA
An Analysis of Deficiencies in India’s Green Financial Market
Julia Freytag
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Acknowledgements
Firstly, I would like to express gratitude to my supervisor Henrik Höglund for his sup- port and guidance during the thesis. I would also like to thank my interview partners for
their cooperation and contribution, without the insights into India’s regulatory frame- work and green financial market this thesis would not exist. A special thanks goes to my
family and friends who supported me throughout my studies.
Thank you!
Umeå, 28th May 2020
___________________
Julia Freytag
Abstract
Context: Over the years, India has evolved as a leading powerhouse of economic growth but belongs to the nations that are most significantly affected by anthropogenic environ- mental changes. As part of the Paris Agreement, India has formulated a national climate agenda, but a large gap prevalent in the green financial market as well as other deficien- cies in the general bond market and the underlying infrastructure restrain the country from attaining those goals.
Purpose: Earlier scholarly works, and green bond reports, in particular, have foreground the number of green bond issuances in India but do not take a critical look at the stagnat- ing development of the market and have not scrutinised the market and its actors in the context of scientific frames of reference yet. Thus, this thesis aims to identify the chal- lenges India faces in scaling the green financial market up while taking the demands and potential contributions of stakeholder groups into consideration.
Methodology: This thesis is grounded in the author’s assumptions of interpretivism and subjectivity. Following these initial considerations, an inductive approach was followed, and a qualitative study was conducted, mainly based on a literature review in areas like sustainable finance, green financial markets and their participants as well as green debt securities and the associated issuers, investors, costs and verification methods in India.
Findings: The main challenges India faces in developing the green financial market fur- ther are the missing transparency provoked by the fragmentary green bond regulation as to disclosure and verification requirements as well as illiquidity caused by a small number of and little environmental awareness among investors. The market relies heavily on the banking sector and green investment projects are slanted towards renewable energy and energy efficiency projects. Moreover, green debt securities lack clear pricing advantages compared to conventional bonds but bear risks for greenwashing activities.
Research Limitations: This thesis was not able to bridge the research gap on challenges for scaling India’s sustainable financial market up. The examination was further initiated by the author’s experiences with the topic and is based on an interpretive approach, thus, argumentations and findings might be value-laden. The small sample size of interviews taken and the limited information on greenwashing within financial activities might have not delivered full insights into the research topic.
Keywords: Sustainability, Green Bonds, Greenwashing, Green Bond Framework, India
Table of Contents
List of Abbreviations ... VII List of Figures and Tables ... VIII
1. Introduction ... 1
1.1. Background ... 1
1.2. Research Gaps ... 2
1.3. Research Purpose and Question ... 2
1.4. Structure ... 3
2. Theoretical Framework ... 4
2.1. Stakeholder Theory ... 4
2.2. Agency Theorem ... 7
2.3. Risk-Reward Trade-Off ... 8
3. Research Methodology ... 10
3.1. Choice of Subject ... 10
3.2. Pre-Understanding ... 10
3.3. Research Philosophy ... 11
3.3.1. Ontological Assumptions ... 12
3.3.2. Epistemological Assumptions ... 12
3.3.3. Axiological Assumptions ... 13
3.4. Research Design ... 13
3.5. Research Strategy ... 14
4. Practical Method ... 16
4.1. Literature Review ... 16
4.1.1. Literature Search ... 16
4.1.2. Source Criticism ... 17
4.2. Interviews ... 18
4.2.1. Sampling Technique ... 18
4.2.2. Formulation of Interview Questions ... 19
4.2.3. Conducting the Interviews ... 20
4.2.4. Ethical Considerations ... 21
5. Data Analysis ... 23
5.1. The First Step – Categorising Sub-Themes ... 23
5.2. The Second Step – Categorising Main Themes ... 25
6. Discussion ... 26
6.1. Deficiencies of India’s Green Bond Framework ... 26
6.1.1. Definition of Green Bonds ... 26
6.1.2. Eligibility of Green Bond Projects ... 30
6.1.3. Disclosure Requirement for Green Bond Issuances ... 33
6.1.4. The Green Bond Framework in International Comparison ... 34
6.2. The Risk of Greenwashing ... 37
6.2.1. Defining Greenwashing ... 37
6.2.2. Recent Greenwashing Activities ... 38
6.2.3. Driving Factors for Greenwashing in Finance ... 39
6.3. Deficiencies of India’s Green Financial Market ... 43
6.3.1. Financial Gap ... 43
6.3.2. Green Bond-Related Costs ... 45
6.3.3. Actions of Financial Market Participants ... 52
7. Conclusions ... 59
References ... 62
Appendix ... 74
List of Abbreviations
BNP Banque Nationale de Paris
CBI Climate Bonds Initiative
CEEW Council on Energy, Environment and Water
CEO Chief Executive Officer
CFA Chartered Financial Analyst
CICERO Center of International Climate and Environmental Research
CLP China Light and Power
CPI Climate Policy Initiative
CSR Corporate Social Responsibility
ESG Environmental, Social and Corporate Governance
EU European Union
GBP Green Bond Principle
GDP Gross Domestic Product
GIZ German Corporation for International Cooperation
HCL Hindustan Computers Limited
ICICI Industrial Credit and Investment Corporation of India ICMA International Capital Market Association
IDBI Industrial Development Bank of India
IFC International Finance Corporation
IIFCL Infrastructure Finance Company Limited
IMF International Monetary Fund
INDC Intended Nationally Determined Contribution
IREDA Indian Renewable Energy Development Agency
IT Information Technology
KPMG Klynveld Peat Marwick Goerdeler
NBFC Non-Banking Financial Company
NGO Non-Governmental Organisation
NTPC National Thermal Power Corporation Limited
OECD Organisation for Economic Co-operation and Development
PNB Punjab National Bank
RBI Reserve Bank of India
SDG Sustainable Development Goal
SBI State Bank of India
SEB Skandinaviska Enskilda Banken AB
SEBI Securities and Exchange Board of India
UNFCCC United Nations Framework Convention on Climate Change
US United States of America
US-$ United States Dollar
List of Figures and Tables
Figure 1. Stakeholder Typology as per Mitchell et al. ... 6
Table 1. Stakeholders of India’s Green Financial Market ... 5
Table 2. Philosophical Stances of the Main Research Paradigms ... 11
Table 3. Central Ideas Guiding Qualitative Research ... 14
Table 4. Ethical Research Principles ... 21
Table 5. Sub-Themes of Analysis ... 24
Table 6. Main Themes of Analysis ... 25
Table 7. Project and Asset Categories Defining Green Debt Securities ... 27
Table 8. India's Intended Nationally Determined Contributions ... 29
Table 9. Green Project Categories as per Green Bond Principles ... 35
Table 10. The Seven Sins of Greenwashing ... 38
1. Introduction
1.1. Background
The history of India’s capital market spans back 200 years, initially established under the rule of the East India Company. Besides being one of the oldest across the globe, vital to the self-image as an independent nation was the establishment of a constitution, providing the basis for putting a secular and democratic republic in place. To date, it has invigorated civic rights, an active Supreme Court and a largely independent press.
Ever since the nation ushered in a burst of economic reforms starting in the early 1990s, India’s financial markets have undergone a metamorphosis which has posted impressive growth across several dimensions (ASIFMA, 2017, p. 7) and made India the world’s fifth- largest economy with an annual GDP of nearly US-$ 3 billion (IMF, 2019).
Besides economic liberalisation, the enormous population remains the greatest challenge, as only a small fraction of Indians has benefited from the economic boom so far, but the majority is still living in abject poverty (Gaikar, 2015, p. 22). While focusing upon rapid economic growth, the country’s leaders have neglected the duty to mandate socially and environmentally sustainability actions, making India one of the nations most significantly affected by anthropogenic climate change (Awasthi, 2018). It is, therefore, in urgent need of a national green financing strategy, raising and leveraging both domestic and interna- tional financial flows from public, private and non-profit sectors on sustainable develop- ment priorities (Jha & Bakhshi, 2019, p. 3798).
India’s policymakers have repeatedly committed their responsibility in aligning the coun- try’s economic growth mission with environmental protection (GIZ & SEB, 2018, p. 80).
On these grounds, various domestic public and private sector organisations have launched green financing initiatives1, addressing monetary gaps in achieving sustainable economic development. The implementation of a national plan to pursue the climate change actions India consented to in the Paris Agreement requires more than US-$ 2.5 trillion2 between 2015 and 2030 (Government of India, 2015), necessitating driving innovations across banking, insurance, investment products and financial instruments as well as the financial system's capacity and readiness to respond to the sustainable development goals (Robins
& Choudhury, 2014, p. 3). Here, green bonds play a pivotal role, enabling inclusive, re- silient and cleaner economic growth while creating environmental benefits simultane- ously (Jha & Bakhshi, 2019, p. 3798).
Alike regular bonds, green bonds are fixed-income securities used to raise capital from investors through the debt capital market. Typically, the bond issuer raises a fixed amount of capital, the principal, from investors over a set period of time, the maturity, provides fixed periodic interest payments, called the coupon, and repays the principal amount at maturity. But contrariwise, the proceeds of green bonds are earmarked towards financing green projects exclusively. The designation as green is applied by the issuer, a public or private entity via its inclusion in a green bond index, or via a tag on analytical tools widely used in financial markets (OECD, 2015, p. 5; Murphy, 2020).
1 Appendix 1 provides a selection of sustainable development initiatives in India.
2 The preliminary domestic requirements to implement a national climate action plan are estimated at 2014-2015 prices (Government of India, 2015).
Since India’s central bank, RBI, issued the first circular on banks’ decisive role as to CSR and sustainable development, stressing their responsibility of incorporating human rights and environmental concerns into corporate activities (RBI, 2007), important steps and progressive measures for facilitating sustainability within the country’s financial sector have been taken3 (India Advisory Council, 2016, p. 33). The initial green financing ac- tions were undertaken without a definition of what constitutes a green bond or of the process to be followed in place, but in 2017, SEBI set out the country’s green bond frame- work. India was further able to expand the issuer base from multilateral development banks to government-backed entities and private sector banks. Nowadays, the majority of green bonds issued are even verified by auditors, renewable energy consultants, or second opinion providers. But green bond projects are slanted towards energy goals, and international investors still remain absent. And eventually, India’s green financial market has not been able to sustain its growth.
1.2. Research Gaps
Despite being one of the oldest financial markets across the globe, challenges and oppor- tunities laying in India’s markets remains largely unexplored. Recent studies of the sus- tainable financial market by Indian economists, and green bond reports published by in- ternational development agencies, in particular, have commended the nation on the com- parably large number of green debt securities issued, but have not analysed other market features such as liquidity, efficiency, knowledge of the market players or the ratio of green bond issuers and investors yet. The need for such an investigation is accentuated by this single-issue perspective researchers show as well as the fact that despite a steep rise in the early years, the market growth stagnates at present. Both scientists and development initiatives have neglected the use of scientific frameworks to fathom the reasons for this situation but pointed to India's potential for sizeable issuances.
Apart from criticism raised of the Indian green bond regulation, researchers have not de- clared regulators' role in governing green financial markets or scrutinised the guidelines that administer the Indian market. Researchers have further not investigated that market under consideration of the demands and potential contributions of various actors.
Descrying the factors that hold India’s sustainable financial market off further growth and identifying areas of development could decrease the research gap. Such a survey could also contribute to getting some feedback about the current green bond regulation and may help to formulate standards for the next updates the regulating authority will make in the foreseeable future.
1.3. Research Purpose and Question
This research is motivated by recent concerns about the development of India’s sustaina- ble financial market, as the distance between issuances of such bonds in India and other leading economies remains enormous (D’Souza & Rana, 2020, p. 9). The Government of India has formulated an ambitious national agenda that should transform the country into a sustainable economy, but currently, many sings indicate the nations will not accomplish this objective. Thereupon, this thesis aims to answer the following question.
3 Appendix 2 provides an overview of the steps taken from 2007 to 2019 to promote sustainable finance and develop a green financial market in India.
Which are the challenges preventing India’s sustainable financial market from further growth?
This thesis aims to establish an understanding of the concept of green bonds and the eval- uation of a green financial market in the Indian context. In the course of this thesis, data on India’s practices in nurturing the issuance of green debt securities are analysed, provid- ing a critical perspective on the steps already taken and existing gaps keeping the nation from the achievement of climate objectives. Thereupon, the main purpose of this research is to highlight and present the various challenges that restrain the markets’ size, liquidity and transparency and that hold investors off further emissions.
The thesis aims to answer the question whether India is already tapping the full potential of its green financial market by utilising domestic resources or whether the nation is still dependent on international development funds to scale the market up and to meet its green objectives. From the perspectives of different market actors, the thesis also tries to answer the question how existing deficiencies in meeting the country’s sustainability goals can be remedied. Thus, as an integral part, India’s green bond framework is scrutinised as to whether it serves internal and external stakeholder groups and compared to similar inter- national standards as to whether it complies with the requirements for sustainability re- porting, since this has not been adequately done in the literature yet.
The development of a green bond market in an emerging economy may constitute a larger problem than in higher-developed countries given the green market’s complex nature and India’s controversies and underlying but fragmentary infrastructure. Encouraging the de- velopment of a robust financing ecosystem, this thesis serves the purpose to examine inputs from and roles of actual and potential market players across sectors, like govern- ment agencies, domestic and foreign financiers as well as industry experts, that can sup- port scaling green bonds up.
1.4. Structure
In the following parts of the thesis, the author elaborates on the theoretical backgrounds relevant to the focal area of this research. She lays out how the research question can be positioned with regard to three existing theories one by one as those represent the frame- work for the discussion of the empirical material gathered. Thereafter, the author explains the philosophical stances she takes over the research topic and gives reasons for the strat- egy pursued to answer the research question. She outlines how she collected data and why she chose this specific approach. Then, she analyses the findings to gain new insights into the research topic and discusses India’s experiences with sustainable finance and identi- fies obstructive factors that deter the market from tapping its full potential to meet the environmental goals the country gave its commitment to. With the final discussion of the market deficiencies and challenges, conclusions are drawn, deliberating on and suggest- ing policy recommendations for improving the flow of green bonds.
2. Theoretical Framework
As aforementioned, India’s green financial market meets a large number of obstacles that need to be surmounted to grow in terms of bond issuances, investors and liquidity. So far, research, and green bond reports in particular, have been spotlighting the number of bonds emitted in international comparisons, and giving the market a positive spin. Present aca- demic studies have been neglecting the interrelations between the participants of a green investment project, such as governments and financial regulators, project initiators, bond issuers and investors, as well as other groups not obvious at first sight including creditors, municipalities, ecological groups and the society as a whole, despite these actors are the fundament to nurture India’s green financial market.
In view of pervious studies’ limitations but also the sustainability goals set and the amount of green funding needed, the stakeholder theory was chosen as the main theoretical back- ground of this thesis. In addition, the author decided to amplify the challenges of devel- oping the green financial market further with regard to the agency theorem that is said to expound the stakeholder concept as well as the risk-return trade-off.
2.1. Stakeholder Theory
Since Edward Freemans’s publication in 1984, the business world’s perception on organ- isations has undergone a radical change - from a sole shareholder orientation to a holistic view that addresses morals and values in managing an organisation. Thus, the stakeholder theory has emerged as an essential tool to bring the organisational strategy into agreement with ethical principles by analysing the impact of associated activities on economic, po- litical, legal, social, cultural and ecological surroundings (Bonnafous-Boucher & Rend- torff, 2016, p. xiii), that are represented by different stakeholder groups. The notion of a stakeholder is seen in the “reciprocal relationship in which a stakeholder is a group which depends on the firm in order to achieve its own objectives and on which the firm depends for its survival” (Rhenman & Stymne, 1965, cited in Bonnafous-Boucher & Rendtorff, 2016, p. 1). In addition, Kaler (2002, pp. 91-92) segregates those stakeholders into claim- ants, as they make demands on the organisation’s functions, and influencers, as they have a bearing on the organisation. Contrariwise, Clarkson (1995, pp. 105-107) distinguishes between primary and secondary stakeholder groups, whereof only the former are deemed crucial for the organisation’s continuation due to steady transactions and interactions, even though both denote rightful interest groups.
Over time, the stakeholder theory has experienced a substantial rise in prominence and has thus been extended beyond management sciences in such a way the concept is now- adays used to pinpoint all entities that are either in an actual or potential relationship with the organisation, which again needs to be understood and managed seemly to create and distribute value (Parmar et al., 2010, p. 407). To detect those relationships, Mitchell et al.
(1997, p. 845) derived a stakeholder typology on the basis of three attributes: the power to exert influence on, the legitimacy of the relation to, and the urgency of the stakeholder's claim on the organisation. The interplay of these characteristics singularises so-called de- finitive stakeholders with diverse behaviour patterns and expectations towards the organ- isation (Carroll, 2004, p. 116). A stakeholder possesses the power attribute, if he is able to impose his will on the organisation through “coercive, utilitarian, or normative means”
(Mitchell et al., 1997, pp. 863-865), the legitimacy attribute, if he perceives the organisa- tion’s actions within a socially desirable system of norms and values (Suchman, 1995, cited in Mitchell et al., 1997, p. 866) and the urgency attribute, if he does not only insist upon his demands to be met quickly but also deems his relationship with the organisation
as critical for the ownership structure, market sentiment or risk exposures, for example (Mitchell et al., 1997, pp. 867-868; Orij, 2010, p. 871). The objectives of stakeholder groups can certainly differ, wherefore the executive is in charge of finding a way to ad- dress the various demands and to generate value for each group simultaneously (Harrison et al., 2010, cited in Parmar et al., 2010, p. 407).
As the stakeholder identification theorem developed by Mitchell et al. (1997) is among the most cited research studies in this area, the participants within India’s green financial market, referred to as the organisation, have been examined in the context of the attributes outlined above. The combination of these attributes has emerged four definite stakeholder groups which are described in Table 1.
Table 1. Stakeholders of India’s Green Financial Market
Stakeholder Group Power Attribute Legitimacy Attribute Urgency Attribute Government of India Setting up the green fi-
nancial market by regu- latory actions, interven- ing in the market de- velopment and satisfy- ing own financing needs
Considering the green financial market a tool to provide funding for attaining the national climate agenda
Assuming responsibil- ity for the sentiment of the green financial market
Financial Regulators Creating an efficient green financial market in India through the es- tablishment of the green bond framework
Setting disclosure re- quirements to enhance transparency and credi- bility of the green bond issuances
Bearing the responsi- bility to regulate secu- rities and commodity market in India Green Bond Issuers Designing the green
bond according to his desires, including size, maturity and project linkage
Allocation of green bond proceeds towards sustainability projects
Anticipation that the market will continue providing the stake- holder with something of great value from is- suance
Green Bond Investors Providence of funding need to close the finan- cial gap arisen from the national sustainability goal
Seeing green invest- ment projects as means to embrace environ- mental consciousness
Investments in green projects that cannot be used differently, mak- ing it very difficult for stakeholder to exit the relationship
Source: Own illustration These definite stakeholder groups can be broken down in smaller groups, and the previous issuances of green debt securities have shown those overlap or are extended at times. The authorities held responsible for governing the sustainable financial market through issu- ing a green bond framework and other regulations are SEBI and RBI, India’s central bank.
They are further in charge of keeping compliance with those legislations under surveil- lance. The group of green bond issuers include the initial emitters, so-called international development agencies, the Government of India, government-backed entities like the In- dian Railway Finance Corporation, NTPC and PNB Housing Finance, state-owned com- mercial banks such as IDBI Bank and Exim Bank, private banks including SBI, Yes Bank and ICICI Bank, as well as private corporations like CLP Wind Farms.
Despite criticism that the theorem is incapable of providing better corporate governance, business performance or business conduct (Sternberg, 1997, p. 3), the stakeholder theory
was singled out as theoretical fundament of this thesis as it enables to identify decision- making mechanisms and power relations within organisations. International associations like ICMA exert some influence on Indian regulators by formulating the GBPs, despite not being active market participants. This shows there is an even larger number of stake- holder groups surrounding the green financial market, that are not deemed definite since they do not meet all attributes of the typology. Those stakeholders may not hold a direct stake in the market or the green investment projects but express their interest in a positive eco-balance and could interfere with the issuer’s reputation (Benn & Bolton, 2011, p.
200). As per Mitchell et al. (1997, p. 873), stakeholders that possess only one of the three attributes are considered latent stakeholders, and if they possess two of the three attrib- utes, they are regarded as expectant stakeholders. Figure 1 illustrates the stakeholder ty- pology educed by Mitchell et al.
Figure 1. Stakeholder Typology as per Mitchell et al.
Source: Mitchell et al., 1997, p. 874 Latent and expectant stakeholders of India’s green financial market, such as environmen- tal activists, NGOs, municipal administrations or the Indian society as a whole, may have a legitimate claim on green bond issuances or sustainability projects in general (Freeman, 1984, Pearce, 1982, cited in Hill & Jones, 1992, p. 133) but mostly lack stringent, nor- mative means to acquire the power attribute. Nevertheless, they expect public and private issuers to do not harm the environment and the quality of life, but in addition, they could play a role in supporting the environmental projects with local infrastructure and favour- able tax treatment (Hill & Jones, 1992, p. 133). Mitchell et al. (1997, cited in Şener et al., 2016, p. 87) adduce definite stakeholders are usually the only group brought into focus by organisations and denote the degree to which organisational leaders favour competing stakeholder demands over each other salience (Mitchell et al., 1997, cited in Şener et al., 2016, p. 85).
The soaring complexity of green financial markets has spawned an increasing number of interactions between established and novel actors (Benn & Bolton, 2011, p. 172), coined by contrary demands. Those potential conflicts pose a threat to realising green investment projects and nurturing market growth. In this context, the stakeholder theory was selected to acknowledge the importance of different stakeholders’ claims in green bond-related decision-making processes.
2.2. Agency Theorem
In addition to the stakeholder theory, there is another organisational theory that points the salience in the relationship between managers and stakeholders up (Mitchell et al., 1997, p. 864). From a theoretical perspective, organisations can be broken down to two partic- ipants, the agent, who is ought to act on behalf of the other party, the principal, in a spe- cific sphere of responsibilities (Daily et al., p. 372; Ross, 1973, cited in Thomsen & Co- nyon, 2012, p. 16). This notion originates from commercial circles, where the separation of ownership and management constitutes a central problem, known as agency theorem (Thomsen & Conyon, 2012, p. 5).
This concept assumes both parties pursue rational interests and an information asymmetry between them, appearing in two forms: Firstly, moral hazard or hidden action befalls when the principal cannot observe the agent’s activities thoroughly, exemplified by the trade-off between insuring managers against risks and incentives lost for risk reduction.
Inciting managers to projects with negative outcomes means acting against shareholders’
best interest and entailing agency costs (Thomsen & Conyon, 2012, p. 36). Secondly, adverse selection denotes that an agent has better, also described as hidden, knowledge.
Perhaps shareholders pick a new manager, but are nescient about his actual capability, skills and motivation, and are also unable to completely monitor the manager’s actions at zero cost (Thomsen & Conyon, 2012, pp. 19-21, 35).
In the context of corporations, this theory signifies the owner, denoted as the principal, who is spurred on to lead his company optimally, but a growing enterprise also necessi- tates skills and managerial experiences in numerous fields. A single person may not bear overarching know-how, thus, the owner selects a separate management team to run his company, composing well-versed professionals in disciplines like marketing, public re- lations, accounting and finance (James, 2017). However, the agency theory builds on the idea that humans lean towards self-serving behaviours which make them reluctant to sub- ordinate individual interests (Daily et al., 2003, p. 372), implying the manager, labelled as agent, may not utilise resources in the same manner as the owner does since he rather focuses on personal benefits or short-term goals. Such contractual relationships typified by conflicting interests are the classical example of agency problems, which should be resolved by governance mechanisms, ensuring the agent acts in the interest of the princi- pal.
Agency relations exist in all types of business affairs, for instance, between shareholders and managers, whereby the latter are the agents since they possess greater expertise about the company’s current performances and conditions, giving leeway for discretionary ac- tions that indeed draw profits for managers but entail higher costs for investors (Shleifer
& Vishny, 1997, p. 744). The agency concept can also be exemplified by the relationship between management and finance. Assuming a manager, the agent, lacks internal funds to undertake investments, financiers, the principals, are motivated by the stock market to provide the means but need to ensure simultaneously that these are not diverted from the
intended use. Based on the free-rider problem, an individual money lender remains obliv- ious to detailed contract enforcement and incurious about the business, its governance or financial standing so that the manager receives more sovereignty over the actual usage of the funds, embezzling money (Shleifer & Vishny, 1997, p. 741).
Besides, an organisation is surrounded by multifarious stakeholder groups whose prefer- ences and expectations towards the organisation differ on the design of operations, finan- cial stability, or the impact on environmental and social matters (Freeman & Evan, 1990, p. 344). Hence, the agency theorem can also be translated into the green financial market, where the investor assumes the role of the principal as he provides funding for sustainable development-linked projects, but the bond issuer, the agent, is allowed some latitude in allocating the proceeds, in case of immature market infrastructures and fragmentary green bond frameworks. If the latter are short of requirements to disclose and verify the use of green bond proceeds, for example, the investor is not provided insights into the transac- tions, but the issuer is prone to direct funds to projects that rather harm than protect the environment. In light of the elemental self-centric notion, it comes as no surprise, if the issuer acknowledges investment interests less, fooling and shaking the confidence of stakeholders (Shleifer & Vishny, 1997, pp. 739, 767; Daily et al., 2003, p. 378).
The theorem assumes that if the agent and principal contract, conflicts of interests can be resolved, but obstacles such as information asymmetries, irrational investment decisions, fraud and transaction costs are likely to intervene in practice (Panda & Leepsa, 2017, p.
79). Thus, resolving such conflicts between the different kinds of green bond issuers and investors cannot be done that easily but might be is a very complex and lengthy process.
The agency theory is utilised as theoretical frame of this study since it extends the concept of stakeholders and points out why systems of checks and balances are of vital importance in developing green financial markets. The theorem dwells on the information asymmetry between green bond issuers and investors, suggesting the possibility to squander instead of allocating funds to green purposes, and on the fact that issuers are likely to forget about other actors’ importance in developing a green financial market. The agency theory does further explain why power is a decisive point for the attention green bond managers give to stakeholders.
2.3. Risk-Reward Trade-Off
The relationship between the risks associated with and the return expected from a finan- cial asset is one of the central trading principles of modern finances, embedded in con- temporary asset pricing models (Piccoli et al., 2016, p. 1). This link is referred to as trade- off as it is based on the assumption that the potential return from an investment rises with an increase in risks and volatility, what means low levels of uncertainty generate only low potential returns, but large uncertainties are rewarded with higher potential returns (Chen, 2020a). Those uncertainties are grounded in a variety of factors, including credit default, interest rate, currency or liquidity risks, and in the context of green debt securities, to the allocation of bond proceeds to non-green purposes, the so-called greenwashing risk.
The risk-return trade-off is commonly utilised as a main criterion under which investment decisions are taken, assessing both individual investments and portfolios at a whole. Mak- ing a compromise about risk and reward is dependent on the investor’s individual risk tolerance and preferred asset rating, intended investment period, future earnings potential and the ability for replacing lost funds, as well as the concentration or diversity of existing asset mixes that either bear too many risks or a lower-than-desired potential for returns (Chen, 2020a).
The risk-reward trade-off is selected as part of the theoretical frame, since for many in- vestors, this precept is deemed the fundamental law of finance (Ghysels et al., 2005, cited in Piccoli et al., 2016, p. 3), and while a number of scholarly works have proven a signif- icant positive relationship between the variables (French et al., 1987, Ghysels et al., 2005, Bali & Peng, 2006, cited in Piccoli et al., 2016, p. 2), others in turn have agreed the rela- tionship is positive but not significant (Baillie & DeGennaro, 1990, Theodossiou & Lee, 1995, Lee et al., 2001, cited in Piccoli et al., 2016, p. 2), and a few researchers reckon a negative relation (Cox & Ross, 1976, Merton, 1976, cited in Piccoli et al., 2016, p. 3). A study by Piccoli et al. (2016, pp. 16-17) revealed that in the leading emerging economies, to which India belongs, the risk-return result is positive and significant, and negative but insignificant in times of higher market optimism.
The risk-return trade-off is further selected as the standard deviations of investments in emerging nations indicate that investing in those markets is generally connected to higher risks than in developed countries, measured by the returns’ total volatilities (Bodie et al., 2014, p. 900).
3. Research Methodology
3.1. Choice of Subject
As the world’s largest democracy, rising economic powerhouse and nuclear-armed state, India does now aspire to become a US-$ 5 trillion economy by the year 2024 (Sitharaman, 2019) but is greatly restrained as a result of extreme weather conditions like flash floods, droughts and record-breaking heatwaves (Jain, 2020, p. 2). An enquiry about the effects of anthropogenic climate change has revealed that India’s GDP is 31 per cent smaller than it would have been in the absence of global warming (Garthwaite, 2019), thus, the country has been peeping the green financial market up for several years but sustainable financial instruments have not entered the mainstream yet. On these grounds, the aim of this thesis is to provide an academic contribution to the analysis of the deficiencies and challenges that hold the nation’s green financial market off further growth.
The author’s upbringing in emerging and newly industrialised countries has aroused her interest in economic developments, thus, she acquired a bachelor’s degree in international business and economics and worked with a financial services company in India, immers- ing deeply in the country’s commercial, economic, legal and socio-cultural peculiarities.
During her master studies, the author set the focus on contemporary topics within invest- ments, risk management and sustainable finance. The knowledge the author generated throughout her professional and academic path established the basis for the thesis topic.
Besides her background, the author chose the topic to highlight the financial sector’s in- termediary role in advancing sustainable economic development by directing funding to new business models and related services, to environmental and social projects and poli- cies and by managing the risks involved. Financial crises and global pandemics have ac- centuated the need for transparent and sustainable business practices shifting from share- holder to stakeholder value creation. India is brought into focus, as the nation adds largely to the world’s economic output with software and engineering skills, exports like petro- leum, chemicals and pharmaceuticals and ambitious forays into doing business abroad.
Green finance is deemed the financial sector’s future, using innovative mechanisms sup- porting the achievement of environmental objectives through both domestic and interna- tional investments in projects with green outcomes.
3.2. Pre-Understanding
In business and management, studies pursued by researchers that are involved in practical affairs of the organisation being studied are thought to be advantageous as those are well- versed in the respective processes. In this context, pre-understanding is referred to as the
“knowledge, insight and experience that researchers have about the lived experience of their own organization” (Bryman & Bell, 2011, p. 414) so that they have already gotten a notion of key elements within organisational approaches but also an opinion that influ- ences the understanding of the research purpose. As this close relationship can certainly impact the data being generated and conclusions being drawn (Nyström & Dahlberg, 2001, p. 339), and pre-understandings differ between individual researchers, it is imper- ative to establish a common understanding to avoid biased presentations of results and to enhance the grasp of the fundamental assumptions made and the research method chosen.
Considering the interest in economic development and the practical experience gained in the field of financial markets, it was self-evident to pick green finance as a central theme.
The interest was awakened from routine problems as to the development of financial and investment strategies under a sustainability perspective, but also from peculiar economic, legal and socio-cultural factors. Sustainable finance is certainly a topic of global attention, but as each nation follows different approaches to establish green financial markets, the author decided to broach this issue within the Indian context, owing to the nation’s role as economic powerhouse.
3.3. Research Philosophy
Generally, the philosophy of a research project depicts on the three elements, pre-assump- tions, theoretical paradigms, and interpretations, that resemble each other in certain as- pects and fortify one another (Creswell, 2007, p. 16). The decision for a particular re- search design needs to be done in accordance with the research purpose and is hence an individual matter. Likewise, a study’s frame of reference is grounded in the way the en- quirer understands the world, his state of knowledge, function within the research project and fundamental assumptions, scilicet what he considers the nature of reality, his attitude to the topic being examined, the role of values in his research, the language and the meth- ods applied during the research process (Creswell, 2003, cited in Creswell, 2007, p. 16).
Table 2 summarises these assumptions that underpin the two main forms of research par- adigms, positivism and interpretivism, and the decision for either of them bears on the design and the approach of conducting the research.
Table 2. Philosophical Stances of the Main Research Paradigms
Philosophical Assumption Positivism Interpretivism Ontological Assumption
The nature of reality There is one reality. This reality is objective and set apart from the researcher.
There are multiple realities, as seen by participants in the study.
These realities are subjective and socially constructed.
Epistemological Assumption The relationship between the researcher and that being researched & what consti- tutes valid knowledge
The researcher is distant from what is being studied.
Knowledge comes from objective evidence about observable and measurable phenomena.
The researcher interacts with that being researched.
Knowledge comes from subjec- tive evidence from participants.
Axiological Assumption
The role of values The researcher is independent from the phenomena under study.
The results are unbiased and value-free.
The researcher acknowledges that the research is value-laden, sub- jective and that biases are present.
Rhetorical Assumption
The language of research The researcher writes in a formal style and uses an impersonal, pas- sive voice, accepted quantitative words and set definitions.
The researcher writes in an infor- mal style and uses the personal voice, accepted qualitative terms and limited a priori definitions.
Methodological Assumption
The process of research The researcher takes a deductive approach, studies cause and ef- fect, and uses a static research de- sign with pre-defined categories.
Generalisations lead to prediction, explanation and understanding.
Results are accurate and reliable through validity and reliability.
The researcher takes an inductive approach, studies the topic within its context and uses an emerging design with categories identified during the research process.
Patterns and/or theories are devel- oped for understanding. Findings are accurate and reliable through verification.
Source: Creswell, 2007, p. 17; Collis & Hussey, 2014, pp. 46-47;
O’Gorman, 2008, cited in O’Gorman & MacIntosh, 2015, p. 70
3.3.1. Ontological Assumptions
The ontological assumption is based on the nature of reality and the question whether there is one reality that can be quantified objectively or multiple realities that are socially constructed as every researcher has an own sense of reality (Collis & Hussey, 2014, p.
47). These orientations are referred to as objectivism and constructionism, respectively, whereof the former assumes social entities are independent or separate from social actors and can thus be studied without considering surrounding factors, and the later deems so- cial entities to be made up of the different perceptions and actions of social actors what is why these need to be studied in consideration of external factors to get a comprehensive picture (Bryman & Bell, 2011, p. 21; Bryman, 2012, p. 32).
As financial markets cannot evolve separately from the actions of their participants, the author takes up the stance of constructionism. This research strives to investigate the hin- drances to the further development of India’s green financial market, and those obstacles are assumed to be multifaceted and found in several dimensions of the market’s underly- ing infrastructure and externalities.
Besides, a constructive approach assumes that individual researchers have distinct views on the same matter. In the research process of this thesis, articles written by economists, accountants, auditors, business school professors as well as directors of green bond initi- atives are examined. Some of them analyse similar aspects of India’s sustainable financial market but singularise different factors that have contributed to scaling green bond issu- ances either up or down. Green bond reports published by development banks and agen- cies are another pillar of this thesis. However, such organisations apply different sets of assessment criteria to evaluate the state of the green financial market and tend to adopt a rather bullish attitude. Moreover, interviews were conducted to comprehend the research topic from a practice-rated perspective, in particular the underlying regulations and infra- structure, market features, actors and deficiencies. Based on the different realities the re- searchers, development agencies and interview partners have, the author can trace com- mon and contrary positions as well as identify patterns in answering the research question.
3.3.2. Epistemological Assumptions
The epistemological assumption responds to the question of how reality is to be studied and what is regarded as acceptable knowledge. Hence, a researcher has to deliberate whether the same principles, procedures and ethos used in natural scientific enquiries can also be adopted in social sciences. Positivism advocates the application of identical meth- ods to generate observable, measurable and with this valid knowledge by keeping an im- partial and open mind (Collis & Hussey, 2014, p. 47). Positivistic views are typically utilised in quantitative studies. In qualitative studies, interpretivism is used which throws a critical glance at applying the same approaches and argues social and natural sciences diverge in substance, therefore, different methods of examination need to be applied, re- flecting people’s distinctiveness against the natural order. Besides, interpretive practices act on the assumption knowledge is acquired by construing data and fathoming subjective meanings so that unique and not-trivialisable conclusions are drawn (Saunders et al., 2012, p. 136; Bryman, 2012, pp. 27-28). Guba and Lincoln (1988, cited in Creswell, 2007, p. 18), as well as Collis and Hussey (2014, p. 47), argue that to gain this knowledge, the enquirer needs to become acquainted with the research topic through actual participation in the study, what gives him an insider perspective.
Detecting the challenges that hold India’s green financial market off further growth, this thesis is based on a literature review and interviews of legal and business professionals
with experience in evaluating green investment decisions. In the course of the research, the author compares the assumptions of the researchers, who are mostly economists, with the findings made by international development agencies and the know-how of the inter- view partners, coming from the corporate world. But those points of view are rooted in different states of knowledge, and hence, a subjective evaluation of data is inevitable so that the author needs to take an interpretive stance.
3.3.3. Axiological Assumptions
The axiological assumption concerns the values, or more precisely the bias, the researcher brings to the study, and how those are handled. Some scientists, primarily in natural sci- ences, consider themselves to be detached from what they enquire and to focus on objec- tivity instead of a subjective collection, analysis and interpretation of data (O’Gorman &
MacIntosh, 2015, p. 69). Creswell (2007, p. 18) argues all scientists bring values to schol- arly work and take a position towards the research question. Acknowledging that the re- search findings are made in conjunction with interpretive approaches and actively report- ing potential biases that may arise from involvement in what is being surveyed is essential to enunciate which information was perceived as fact and what are the interpretations drawn from it (Collis & Hussey, 2014, p. 48; Denzin, 1989a, cited in Creswell, 2007, p.
18).
As values are the guiding factors of all human actions (Heron, 1996, cited in Saunders et al., 2012, p. 116), even the act of choosing a research topic is driven by value judgements, and on these grounds, undertaking research cannot be completely value-free. The author’s experience with the research topic is central to the choice of question to be answered and of the research design, but she admits her study is value-laden. This thesis is triggered by the eagerness to grasp India’s green financial market and its actors to identify the factors that keep the market from further growth. By taking scientific articles, green bond reports and interviews as base of the study, the author attaches importance to the knowledge de- rived from the findings made by other researchers. She makes further explicit that an interpretation of the data collected and the dimension of reflexivity (Ormston et al., 2013, p. 4) are vital to produce an overarching survey, and her way of understanding the data can be traced back to the fact that she used to be involved in what is being enquired.
3.4. Research Design
The link between theory and research is a decisive factor in the choice of research meth- odology. A researcher can either basis his study on theoretical constructs and on what is already known about a particular topic, then deduces a hypothesis which needs to be scru- tinised empirically and, eventually, draws conclusions from his findings for the theory used. This top-down line of action is a so-called deductive approach (May, 1998, p. 258), whereby the theory guides the research and that is mainly used in quantitative researches (Bryman, 2012, pp. 19, 24). Otherwise, the enquirer can follow an inductive, also referred to as bottom-up, approach (May, 1998, p. 259) that is shaped by his observations while collecting and analysing data (Creswell, 2007, p. 19) and in which the theory is deemed the outcome of the study. In this case, his findings and interpretations of these findings serve as proof of the theoretical foundation and contribute to the state of knowledge (Bry- man, 2012, p. 25).
With this thesis, the author aims to provide new insights into India’s green financial mar- ket, a topic that has been previously examined by finance professionals and international development agencies to a certain extent. Thereby, she uses an inductive approach which
allows her to modify her strategy of data collection and analysis as soon as new questions pop up. Unlike a strict step-by-step process that follows a linear notion of causality, this open-ended, flexible and explorative way of doing research allows the author to acquire an extensive knowledge base of the topic being studied.
3.5. Research Strategy
The decision for a particular research strategy is generally to be taken in accordance with the research topic. As previously mentioned, this thesis investigates the factors that hold India’s green bond market off further growth - and this analysis is predicated on the per- spective of different stakeholders as well as on the agency theory and the risk-return trade- off underpinning investment decisions. While a quantitative approach entails collecting numerical data, perceiving the link between theory and research in a deductive way and acting on assumptions grounded in positivism (Bryman, 2007, p. 160), the author decided against the application of such methodologies as those are based on the objective assess- ment of data and testing theoretical constructs. The author, however, chose the research topic due to personal affiliations, thus, the starting point is the knowledge derived from earlier empirical findings. Based on these, further knowledge is taken from scientific lit- erature and hypotheses are formulated, which are then reduced to practice and assessed as to empirical provisions, to produce representative data. The thesis pursues the objective of delivering insights into India’s commercial, regulatory and socio-cultural peculiarities, and their hidden but causal relationships that form obstacles for turning green bonds into mainstream financial instruments. Hence, the author is aware she cannot base her enquiry on a unified theoretical and methodological concept, as it is characteristic of qualitative researches (Flick, 2009, p. 16). She acts further on the assumption that interpretive prac- tices need to be applied to acquire knowledge and to draw non-generalisable conclusions, wherefore the subjective evaluation of data is part of the research technique. Moreover, the author considers India’s green financial market a complex construct of abstruse and distinct behavioural patterns by its participants, wherefore, it cannot be analysed sepa- rately from its actors and external factors. On these grounds, she opts for decomposing the market into constituent elements that may pose challenges to its further development and for scrutinising those in their individual, mundane contexts instead of creating labor- atory situations. Overall, this displays a qualitative research approach, in which funda- mental assumptions and methods of analysis differ significantly from those determining quantitative researches.
The essential elements of qualitative research, described by Flick (2009, p. 14) and out- lined in Table 3, enable the author of this research to view India’s green financial market from the actors’ frames of reference and to perceive reality as they experience it (Corbin
& Strauss, 2008, cited in Taylor et al., 2015, p. 18), enhancing holistic and flexible think- ing and the ability to pursue thought-provoking impulses immediately. Consequently, the process of qualitative research is also referred to as a sequence of decisions (Flick, 2009, p. 128).
Table 3. Central Ideas Guiding Qualitative Research
Features of Qualitative Research
1 Choice of appropriate methods and theories
2 Recognition and analysis of perspectives of the participants and their diversity 3 Self-reflexivity of the researcher and reflection on the research
4 Variety of approaches and methods in qualitative research
Source: Flick, 2009, p. 14
The incorporation of both earlier empirical findings and findings made during the process of collecting data provides the author with the opportunity to identify interrelations be- tween the different factors, that hinder the green financial market from scaling up, in their concrete contexts of the research question and to grasp rationales behind subjective and contrasting perspectives. The exploratory and interpretive nature of the thesis allows con- ducting a detailed analysis with as many facets as possible so that patterns are derived for further understanding.
4. Practical Method
By defining the research strategy, the author aims to apply methods and techniques that generate and scrutinise empirical data. However, the availability of resources such as time and previous academic studies as well as the researcher’s state of knowledge and philo- sophical stances affect this choice. In the present study, the author preferred to conduct a qualitative research that is primarily based on a review of the existing literature on green bonds, while the views of the interview partners are also involved in specific matters.
4.1. Literature Review 4.1.1. Literature Search
The author started the research process with the collection of data from various sources, that help to answer the research question. From April till May 2020, several search rounds have been performed which started with a broad literature reconnaissance using the key- words and -phrases, sustainable finance, green financial market, green debt securities and green bonds India, gaining an overview of the sustainable bond market, the mechanisms, actors and progress already made in India. As it provides a simple way to widely search- ing for academic literature from numerous disciplines and sources published by various authors, the online library of Umeå University and Google Scholar were availed as the primary data sources. The papers obtained in the first round were studied and examined trying to identify thematic areas of research, that can be seen in Chapter 5.1.
In the following, the exploration went more into detail by looking for publications which broach the issue of specific hurdles for the development of India’s green financial market, including the search for other keywords like illiquidity, eligibility criteria, verification, green premium, cost-competitiveness, green bond labelling and greenwashing. Moreover, the author searched for specific publication titles and researches, for example, the studies by Shsihlov et al. (2016) and Bachelet et al. (2019), the Report on Trend and Progress of Banking in India by the central bank RBI and the green bond report of the Swedish Bank, SEB, and the German development agency, GIZ. Based on the data collected during sev- eral search rounds, main and sub-themes as to challenges for the growth of India’s green bond market were identified, as it can be seen in Chapter 5.
While exploring the databases, the author set the focus on peer-viewed articles and reports by renowned researchers and development institutions. After the completion of the search process, approximately 50 scientific papers and 30 green bond reports with publication dates over the period from 2011 to 2020 and 2014 to 2019, respectively, were analysed.
These papers were published in a variety of Indian and international journals concerning auditing and accountability, innovation policies or sustainable development, for example.
The authors of these articles are mainly economists from India and senior finance aca- demics with significant work experience in sustainable development, listed companies, local and international audit firms. Even though the articles were written in recent years, the author searched for the first scholarly works cited to ensure the paraphrasing is in line with the original statements. Most of the reports were, in turn, prepared by climate insti- tutes and global initiatives like the CPI, ICMA, IFC, OECD, or UNEP. In addition, gov- ernmental reports and official bulletins reviewing and evaluating the stage of the coun- try’s green bond market contributed to this research. Here, the previously mentioned pa- pers were used again supported by recent articles from authors, like CFA directors and
CBI managers, published in leading domestic business and economic newspapers such as The Economic Times and The Hindu Business Line, complementing the literature search.
All sources used are perceived as empirically grounded, safeguarding high quality and the credibility of the data gathered. The focus was set on collecting data concerning var- ious sustainable finance-related topics and by different researchers or development insti- tutions. The search process was directed to researches spanning more than one year, as it usually requires observations over several years to gather robust evidence for the discov- eries made. Every paper, article and report was summarised and labelled in accordance with the topic analysed, like green bond verification, financial performance, issuers or investors, as well as the information content, judgement on ‘true’ sustainability, economic consequences and common criticism of the green bond framework, the research method applied, including deductive, qualitative and experimental approaches, and the context of analysis, such as public or private governance.
A qualitative research approach was selected as this “stresses the understanding and cri- tique of process and context, recognising uniqueness and difference” (Parker, 2012, p.
56). On that account, the author utilised numerous sources to take the diversity of views on sustainable finance in India into consideration. The sources that contributed the most to this thesis are the studies conducted by Modi (2017), Aggarwal and Kadyan (2014), Park (2018) and Bachelet et al. (2019), as well as the reports published by the India Ad- visory Council (2016), GIZ and SEB (2018), Shishlov et al. (2016) for the Institute for Climate Economics, Ghosh et al. (2016) for the US-American Natural Resources Defense Council and the Indian CEEW as well as Robins and Choudhury (2014) for the United Nations Environment Programme and the Federation of Indian Chambers of Commerce and Industry. The following chapters pinpoint the similarities and differences between their research results, and based on this discussion, the thesis explores the challenges for the further growth of India’s green financial market as to infrastructural deficiencies, gov- ernmental issues, and predictive kinds of behaviour, etc.
In addition to the search for literature on India’s sustainable financial market, the author selected different articles and books to outline the theoretical frameworks and the research methodology of this thesis. These chapters are mainly grounded in peer-viewed journals and books found in Umeå University’s online library. Upon the recommendation of her professors, the author singled the leading publications on research approaches in business and management, or social sciences in general, out. The aim was to incorporate different views on the research paradigms, designs and methods to explain fundamental points of view and to become able to give chapter and verse for the research approach chosen.
The identification of guiding studies in the fields of the theoretical frameworks used took a little longer, as the papers concentrate on the application of those theorems in different contexts instead of giving a universal description of the concepts. Thus, Google Scholar was consulted, too, using keywords such as stakeholder theory, information asymmetry, agent and principal, or risk-reward theorem.
4.1.2. Source Criticism
There are certainly a number of articles analysing different aspects of sustainable finance in India available, however, none of the papers found examine the market in reference to a scientific framework. Besides, some of these, and the green bond reports, in particular, appreciate the steps already taken by the Indian government and provide a gratifying out- look for the future. However, they base their assessment on emission figures of past years,
but leave the current stagnating numbers of issuances, issuers and investors unmentioned.
Certain development agencies compare the number of bond issuances in India with those made in other emerging and developing economies, but India falls far short of the emis- sions in China or in industrialised countries. Besides, academic researchers have so far neglected to draw comparisons of India’s sustainable financial market with those of other economies, and in line with scientific criteria.
The research strategy also comprises the examination of secondary data in terms of de- velopments initiated and the identification of unstudied area and knowledge gaps in the field of India’s green financial market. While several studies focus on green bond-related costs and market transparency, there is, for example, a lack of scholarly works scrutinis- ing the green bond framework or greenwashing activities within sustainability initiatives.
So far, researchers have recognised low environmental consciousness among Indian in- vestors, but have not determined how the level of ecological awareness could be increased or how investor education could like. Some researchers talk about the need for a green finance ecosystem in India but have not gone into detail, thus, there is lack on evaluating potential green bond issuers and investors that have not entered the market yet.
4.2. Interviews
As part of a qualitative approach, the researcher interacts with what is being enquired and knowledge is derived from subjective evidence (Collis & Hussey, 2014, pp. 46-47). Thus, the author of this thesis initially intended to undertake interviews with legal and financial experts on India’s green bond market and to utilise those as the prime base of her research.
Despite concerns over subjective rationality, interviews are considered means to establish an understanding for the complexity of research topics by elaborating on the interviewee’s
“complex stock of knowledge about the topic under study” (Flick, 2009, p. 156). But as sustainable finance represents a rather novel topic in the Indian context, foreign investors have hardly contemplated environmentally-oriented projects in South Asia yet. Besides, due to low ecological awareness, domestic green consulting businesses have also not been established so far. Thus, there is a scarcity of experts coming from the corporate world on the topic being researched. On these grounds, the author thought about reaching out to experts from the academic world, but this had resulted in a doubling of the findings made during the literature review. Eventually, the author decided to base her research on a lit- erature review and to enrich the study by real-life perspectives of experts on India’s gen- eral legal environment and financial markets.
4.2.1. Sampling Technique
A stage in the research process is the decision about the sampling technique applied. The author intended to interview experts on the green financial market in India, coming from legal and corporate finance businesses. But as aforesaid, there is a scarcity of experts on sustainable finance in India, thus, the author planned to conduct interviews with legal and financial professionals with great expertise on the country’s general economic, regulatory and financial characteristics. However, reaching out to Indian businesspeople during a global pandemic is rather difficult, as the government imposed a nationwide lockdown, coming into force on 24 March 2020 within less than four hours of notice (Nair et al., 2020, p. 726; Gettleman & Schultz, 2020). These preventive measures were again and again extended until the end of June 2020 (Pundir., 2020), wherefore, the author had to come up with an alternative approach to selecting interview partners.
