Insolvency Law Academy, India

Climate Impact & Sustainability Data (2024)

Climate change poses serious risks to economies. The increasing frequency and intensity of natural calamities such as floods, cyclones, extreme heat, wildfires and other manifestations of climate change leads to substantial operational disruptions and financial losses for enterprises.
Physical risks of climate change (floods, wildfires, etc.) causing damage to assets and operational disruptions.
Transition risks from shifting to a low-carbon economy (regulatory changes, market shifts, technological advancements).
Increased climate change-related litigation leading to substantial liabilities.
Debt defaults due to reduced revenue generation capacity and increased expenditures.
Vulnerability of MSMEs to climate change risks due to limited resources and access to finance.
Negative bankruptcy spill-over effects impacting interconnected businesses.

Using the Insolvency and Bankruptcy Code 2016 (IBC) to address climate change risks.
Allowing insolvency proceedings to be initiated before debt default occurs in cases of imminent climate-related risks.
Establishing ad hoc committees to include stakeholders (environmental regulators, communities, NGOs, experts).
Balancing public interest with creditors' rights in insolvency proceedings.
Prioritizing environmental claims in insolvency proceedings.
Integrating environmental expertise into the insolvency process.
Limiting disclaimers of environmental liabilities.
Facilitating post-commencement finance to mitigate transition risks.
Promoting ESG and sustainable financing.
Raising awareness of climate change risks and their linkages with insolvency policy.