By P. GopalaKrishnan, Managing Director, Southeast Asia, Middle East and Africa, GBCI
India has committed to net zero by 2070. The number attached to that promise is hard to grasp: $22.7 trillion in capital investment between now and then, with $8.05 trillion of it needed in the next 25 years, according to a recent CFA Society India analysis. The same study warns of a financing gap of $2.5 trillion by 2050, growing to $6.5 trillion by 2070. Most of that shortfall sits in debt, not equity.The real estate sector cannot watch this from the sidelines. Buildings eat up a large share of India's energy, and the country is adding commercial, residential and industrial space faster than anywhere else in the world. A good chunk of the capital India needs to raise will end up funding buildings, one way or another. The choice is what kind. Buildings built to perform for the next 30 years, or buildings that lock in high running costs and carbon exposure before their useful life is even half over.
Green building and sustainable finance have operated as separate conversations in India. They should not. Our sustainable debt market is still young. Cumulative issuance across green, social and sustainability-linked debt stood at $55.9 billion by the end of 2024, against China's $555.5 billion in the same window. Green bonds, our largest category, reached $32.2 billion by mid-2025, 28th among 82 countries and just 0.9% of the global market. Green loans added roughly $19 billion. Transition bonds and loans, which hard-to-abate sectors such as steel and cement will need eventually, have not been issued here at all. Sustainability-linked bonds have had some success. UltraTech Cement, JSW Steel and Adani Electricity Mumbai together raised close to $1.7 billion, though every one of those issuances happened offshore.
Buildings that perform, priced accordingly
Having spent three decades watching, developers and lenders argue over one question: does green investment actually pay off? The data increasingly says yes. JLL's synthesis of 42 international studies found that certified green buildings earn an average 6% rental premium and a 7.6% sales premium over uncertified peers. CBRE's 2023 survey found 45% of market participants willing to pay more for certified assets, investors more so than occupiers. UBS, looking at transaction cap rates in New York, found that Leadership in Energy and Environmental Design (LEED) Platinum, Gold and Silver-certified buildings are priced at a lower cost of capital than uncertified ones. It cuts both ways too. Underperforming, high-emission buildings are now trading at what the industry calls a brown discount. Investors are pricing in the risk that stricter regulation could make these buildings obsolete before their useful life is over.A common language for lenders and builders
What makes a rating system like LEED useful to a bank or a bond desk is that it turns a subjective claim, about a building being sustainable, into something that can be underwritten. The (LEED) rating system and PERFORM, the United States Green Building Council’s (USGBC's) portfolio-level verification tool, align with the categories used by The International Capital Markets Association (ICMA’s) Green Bond Principles and Green Loan Principles. These principles require issuers to specify how proceeds will be used, whether for renewable energy, energy efficiency, green buildings, or climate resilient infrastructure. They also plug into GRESB, already used by institutional investors to benchmark real estate portfolios worldwide. More than 40 national and regional sustainable finance taxonomies exist today, and most of them, including the ASEAN Taxonomy, and frameworks in Singapore, Hong Kong and Malaysia, explicitly recognise LEED. That shared reference point is what keeps friction and greenwashing risk down for instruments like transition bonds, which India has yet to bring to market.The Climate Bonds Initiative (CBI), whose standards have helped shape global green bond markets, recognizes certified green buildings as eligible assets under its buildings criteria. Across multiple jurisdictions, LEED certification is frequently used by issuers, investors and external reviewers as evidence that a building meets internationally accepted environmental performance thresholds. For banks and institutional investors, this matters because a LEED certification does not merely signal operational efficiency; it provides a familiar and globally recognized framework for assessing environmental risk, asset quality and alignment with investor expectations.
Such recognition would also provide comfort to Indian banks, NBFCs and institutional lenders that are expanding their green and sustainable finance portfolios. Financial institutions are understandably cautious when evaluating green claims because of the reputational and regulatory risks associated with greenwashing. By relying on a certification system that is already referenced by global capital market frameworks and sustainable finance taxonomies, lenders can reduce due diligence complexity and increase confidence that financed assets genuinely deliver measurable environmental outcomes. In effect, LEED can serve as an independent verification mechanism that bridges the gap between capital providers seeking credible green assets and developers seeking access to sustainability-linked financing.
The piece still missing in India
On the regulatory side, India has done real work. The Securities and Exchange Board of India (SEBI) has tightened disclosure for green debt securities. The Reserve Bank of India (RBI) has a framework for green deposits. The International Financial Services Centres Authority (IFSCA) is pushing on transition finance. But the centrepiece, a nationally notified climate finance taxonomy, is still pending, well over a year after the draft went out for public consultation. That gap is worth closing quickly. Once notified, the taxonomy should explicitly recognise credible, internationally benchmarked green building certification as evidence for use of proceeds, so banks and non-banking financial companies (NBFCs) can price green and transition loans with confidence instead of defaulting to caution. LEED certified assets abroad have already unlocked real discounts on financing, from lower interest rates to higher loan proceeds, to reduced mortgage insurance. There is no reason Indian lenders cannot build the same, once the underlying data earns their trust.The $2.5 to $6.5 trillion gap that CFA Society India has flagged will not close because of policy intent alone. It closes when developers, lenders, regulators and certification bodies start treating building performance as something you can actually put a number on, not a line in a sustainability report. Buildings that perform better lower risk and cost of capital for whoever is financing them, and that access to capital, in turn, pushes the market toward more high-performing buildings. India has the ambition. Most of the regulatory scaffolding is there, too. What is missing is finance and green building speaking to each other in the same terms, using the same evidence, at the same pace.
As India seeks to scale green bonds, green loans and transition finance, internationally recognized certification systems such as LEED can play a role similar to a credit rating, not by assessing financial strength, but by providing trusted, third-party validation of environmental performance. That common language can help unlock larger pools of domestic and international capital for the built environment sector.
