New white paper highlights how ESG-integrated financing can align India’s USD 1 trillion real estate expansion with climate imperatives

As India’s real estate market heads toward the USD 1 trillion mark by 2030, a new white paper by Sundaram Alternates argues that the sector’s next phase of growth must be built on sustainability and climate accountability. The report, titled “Bridging the Gap: The Essential Role of Climate-First, ESG-Integrated Private Credit in India’s Real Estate Growth,” outlines how private credit can simultaneously close the financing gap and accelerate the country’s green transition.

Traditional lenders such as banks and NBFCs have scaled back from mid-stage construction financing, creating a “missing middle” in capital flow. The paper identifies climate-first, ESG-integrated private credit as the most effective instrument to fill this void offering 15-20 per cent risk-adjusted returns while ensuring that India’s rapid urbanisation aligns with long-term climate goals.

According to the report, the built environment accounts for nearly 40 per cent of global CO₂ emissions, making sustainable financing frameworks critical. It calls for integrating measurable environmental outcomes such as energy and water savings, embodied carbon reduction, and green-certified spaces into every stage of real estate funding.

The white paper benchmarks global best practices where ESG-linked private credit has already become mainstream. In the United States, the private credit market now exceeds USD 800 billion under SEC disclosure rules; Europe’s SFDR mandates ESG integration across funds; and Japan’s GPIF, the world’s largest pension fund, requires climate-aligned investments. Similar policies in Singapore and the Middle East link sovereign and institutional capital to green objectives.

India, the report notes, is well-placed to leapfrog global peers through policy instruments such as Sebi’s Business Responsibility and Sustainability Reporting (BRSR) norms and the country’s upcoming green taxonomy. Together, these frameworks could help direct private capital toward projects that deliver both financial returns and environmental resilience.

The paper also emphasises risk management as a cornerstone of sustainable private credit. It identifies four pillars amortising payout structures, diversified security packages, promoter alignment, and transparent covenants as crucial for maintaining investor confidence while promoting accountability.

In conclusion, Sundaram Alternates positions climate-first private credit as a transformative tool for India’s real estate ecosystem, one capable of bridging its funding gap, mobilising global ESG capital, and defining a new standard for sustainable growth.