Vasudhaiva Kutumbakam and Sustainable Finance and Investment: Sustainable
Pathways To Embrace The New World Order
Riddhi Thareja, Vivekananda College (University of Delhi)
Riddhi Gupta, Vivekananda College (University of Delhi)
Siddhi Gupta, Vivekananda College (University of Delhi)
Abstract
The old Indian philosophy of Vasudhaiva Kutumbakam, "the world is one family,"
contains very valuable insights for generating a sense of oneness and unity among
all human beings.This essay delves into the contemporary context relevance of this
philosophy and especially its implications for sustainable finance. By integrating
environmental, social, and governance (ESG) factors into financial decision-making,
sustainable finance aims to reduce the risks of environmental degradation and social
inequality. Based on the lessons of the Mahopanishad and recent research, this
paper offers a model of how the Vasudhaiva Kutumbakam philosophy can shape the
future of sustainable finance. The paper also considers green finance definitions,
including investment in renewable energy, social inclusion, and good governance
strategies. Lastly, the paper also pinpoints green finance gaps, especially the
insufficient investment in green infrastructure since the 2008 financial crisis. It
demands scaling up financing vehicles like green bonds, green central banking, and
community-based green funds, with particular stress on closing the green financing
gap through policy and regulatory approaches. Although problems like regulatory
hurdles and capacity issues exist, it is apparent that there is a need for a standard,
transparent green finance process. In conclusion, sustainable green finance models
must be incorporated into international economic plans to ensure long-term
environmental and societal gains.The methods used for writing the research paper is
purely based on secondary data analysis. Research papers , reports and articles and
other credible sources have been used to conduct this study on the topic Vasudeva
Kutumbakam. To ensure objectivity ,multiple research paper were used and the
findings were cross examined .
Key words
Green Finance , Environmental, Social, and Governance (ESG), Sustainable Business
Practices, Environmental Sustainability, Green Investment, Green Financing Gap
INTRODUCTION
Vasudeva Kutumbakam, the ancient Indian philosophy of "the world is one family," carries
very profound meaning even in the modern world today. It conveys an immensely profound
sense of oneness and belongingness among all human beings beyond national, cultural, and
religious differences (Pramod Y. 2025)
Ayam bandhurayam neti ganana laghuchetasam, Udaracharitanam tu vasudhaiva
kutumbakam." (Mahopanishad 6.72).
This implies that only narrow-minded individuals view others as either their friends or
strangers, but broad-minded individuals view the whole world as one huge family. The
primary objective of this philosophy is to eliminate the "Us vs Them" mindset, which is the
source of most conflicts (Gupta, 2020). In the present era, especially in the contemporary
wave of sustainable finance, which encompasses the ESG, i.e., the environmental, social, and
governance elements in financial decision-making, the ancient wisdom aids in establishing a
robust economic framework. (Soppe, 2009). The aim of sustainable finance is to direct
investments supporting sustainable development and reducing the risk of environmental
degradation and social disparity. This is in accordance with the principles of Vasudhaiva
Kutumbakam, which focus on humanity's shared responsibility to promote social and
planetary wellness. Nations and financial institution should collaborate and focus on purpose
driven finance rather than profit maximization.
Intro should be like this
The expressions green finance and green investment
have expanded during the last few
years, widening perspectives to finance sustainable initiatives.Within this
study, we summarize the scientific literature on green finance in
order to seek for progress, chief topics, and policy recommendations.
We then describe how green finance can also play a central role
in assisting in developing and funding biofuel initiatives in Brazil. The
biofuel policy (RenovaBio) established a carbon market the so-called
"Decarbonization Credits" (CBIOs), which is a
financial instrument seeking to promote sustainable production
and use of biofuels and reduce greenhouse gas emissions. The
conclusions are that green finance has to develop with a
clear indication of their requirements and standards not to fund non-
green projects and projects ignoring social and environmental
sustainability for economic benefit, and enabling investors to
be in a better position to assess risks and opportunities of their
investments. In the context of green finance for biofuel, although there
are some studies showing that biofuels can lead to the transition towards
a green economy, others warn of the environmental cost of large-
scale production, which can have negative impacts on biodiversity, and
land-water use. The green finance issue in Brazil will probably find
fertile ground in the biofuel sector. But this will
be conditioned on agricultural sustainable practices, and
also on designing the RenovaBio program in a way that is transparent,
accountable, and socially and environmentally responsible.
green finance defintion
Sustainable finance is investing in any activity that promotes green
energy, social inclusion, and good governance practices.
Investment firms are developing new instruments that use their
client funds to tackle major climate issues. These are renewable energy
funds that invest in solar companies, and green and sustainability bonds
to raise capital for projects from the debt markets.
Green term financing for solar rooftop and ground-
based solar installations can be provided by sustainable
financing, finance acquisitions and project portfolio finance by
infrastructure funds, and invest in solar joint ventures.
- Various definitions of "green finance" have been established by financial
institutions, governments, and international organizations (Lindenberg,
2014, UNEP - UN Environment Programme, 2020, UNFCCC, 2020).
For example, the European Banking Federation's definition that green
finance includes environmental factors such as pollution, greenhouse gas
emissions, biodiversity, water, or air quality issues; and climate change-
related factors such as energy efficiency, renewable energies, prevention,
and mitigation of climate change related extreme events (EBF, 2017).
csr and gf(abstract)
Green finance of corporations is essential to safeguard socio-
economic activities to achieve sustainable development. Corporate social
responsibility (CSR) is believed to be
the catalyst to balance communities by means of sustainable
business operations. In this context, the research is targeted at
the contribution of green finance, encompassing green
investment to fulfill social responsibility goals and shareholders'
wealth within the S&P 1500 firms. Panel data on 451 companies listed
in S&P 1500 were collected between 2012 and 2023. A panel-fixed model
was applied to test hypotheses that are posed. Additionally, endogeneity
bias was addressed by the quantile-generalized method of moments
(GMM). The results from the study were that green finance
score contributes positively to US CSR. However, there was a U-shaped
relationship between the green finance index and the allocation of social
responsibility funds. Green finance has a positive impact on wealth
maximization and payment of dividends in the case of
shareholders. Besides, green finance and
its accompanying environmental practices and green supply chain
also benefit shareholders' wealth maximization. The findings of
the study confirm stakeholder theory, social justice theory and
shareholders' theory.
# gap reasons
The most discouraging aspect of the contemporary global economy
is that it has too low an investment rate. Between the pre-2008 crisis
years, residential spending and private consumption drove the growth of
high-income nations. In the crisis, both collapsed, and the investments
that should have filled their place never occurred. This must be reversed.
Post-crisis the world's major central
banks attempted to spur spendingand employment by lowering interest
rates
and this policy worked, up to a point. By pouring liquidity into capital
markets and holding
market interest rates low policymakers encouraged investors
to drive up the prices of stock and
bonds. This created financial wealth in the form of capital gains,
while encouraging consumption
and - through new issues of stocks - some investment. But this
policy has reached as far as it can and imposed unmistakable costs.
When interest rates are, or even below, zero investors borrow
for very speculative purposes and thus the general investment quality
has declined, and leverage has risen. There is a real risk that there will
be large drops in asset prices when central banks finally tighten credit
(Sachs 2016).
But while monetary policy was being pushed to the breaking point, lost
was a rise
in long-term investment and financing of infrastructure, especially for
green energy
initiatives. In most countries, and particularly in developing economies,
the public sector cannot remotely begin to fill this huge investment gap
and the
private sector has not been sufficiently interested.
The main reasons why the private
sector has not been so far
interested in engaging in long-term financing of
infrastructure investment, like green
energy investments, are the low return and the associated risks (Yoshino
and
Taghizadeh-Hesary 2018).
Considering the aforementioned conditions, we must increase the
financing of green
investments with environmental advantage if we want to achieve the
SDGs, by new financial
instruments and new policies, like green bonds, green banks, carbon
market instruments, fiscal
policy, green central banking, "fintech", community-based
green funds, etc., all collectively known as "green finance."
# green financing gap (reasons)
One more very important issue that needs to be addressed when it comes to filling the
green financing gap is green central banking. Central banks have the implicit or explicit
responsibility for maintaining financial and macroeconomic stability, and should therefore
ensure climate and other environmental risks are managed at a systemic level.
Alongside, central banks - through their prudential management of money, credit, and the
financial system - hold a strong lever to ensure facilitating the construction of green finance
templates and requiring proper environmental and carbon risk pricing on the part of financial
institutions. Of interest here is contemplation of the fiscal policy arrangements through which
central banks, along with other regulatory entities in the financial sector, would be able to
manage environmental risk and cultivate green finance.
The fiscal policy measure to increase the rate of return on green projects
and consequently increase the share of private sector contribution
to the projects is crucial. Countries can use tax relief or tax credit
on a large scale in an effort to stimulate the utilization of renewable energy.
Production tax credit is extensively utilized in the US to stimulate wind energy
and investment tax credit to stimulate solar energy. These tax
credits in order to limit corporation tax or income tax relief in exchange for
investment in
renewable energy. The US has extended its investment tax and production tax
credit
policies until 2020 (Azhgaliyeva, Kapsaplyamova, and Low 2018).
*Challenges to Implementation*
Regulatory Barriers: There are not regulated regulatory models and definitions, which limit
the large-scale applicability of green finance, with harmful effects like greenwashing(Sule et
al., 2024)(Ismael et al., 2024).
Capacity Constraints: The high transaction cost and lack of proper institutional infrastructure
in emerging countries limit their ability to maximize green finance effectively(Raman et al.,
2025)(\\"Green finance: a way to foster sustainable development in an emerging country\\",
2024).
- redundant - The EU Taxonomy Framework (hereinafter, the Taxonomy) and the
"Sustainability-related disclosures in the financial services sector" regulation (Regulation
(EU) 2019/2088) will launch a new era of sustainability reporting and measurement. In the
meantime, there are a number of regional initiatives for promoting sustainable finance
ongoing, for instance, the Green Industry Guiding Catalogue of China (UN PRI, 2021). In the
heterogenous regulatory environment, and in the need to establish clear standards, the
Organization for Economic Cooperation and Development (OECD) invited the financial
sector to establish a common vision of impact measurement, one it termed as an "impact
imperative" (OECD, 2019a). It is this imperative that drives our own research too.
CONCLUSION
In summary, the ancient Indian philosophy of Vasudhaiva Kutumbakam, which is based on
the concept that "the world is one family," provides useful insights for the future of
sustainable finance. By incorporating environmental, social, and governance (ESG)
considerations into financial decision-making, sustainable finance can tackle some of the
most pressing global issues like environmental degradation and social inequality. This article
has discussed how this philosophy could be successfully translated to the contemporary green
finance context in terms of promoting investments that focus on renewable energy, social
justice, and sound governance.
In addition, the research points out the shortcoming of the existing practice of green finance,
notably the failure to make enough investment in green infrastructure after the 2008 financial
crisis. In order to bridge these gaps, it is essential to increase financing vehicles like green
bonds, green central banking, and community green funds, backed by strong policy
backstopping and regulatory designs. In spite of the challenges that face it, including
regulatory and capacity challenges, it is evident that standardization of procedures in green
finance is fundamental to securing long-term environmental and societal values.
Finally, the convergence of sustainable finance models with the spirit of Vasudhaiva
Kutumbakam provides a holistic solution to creating a healthier world and a more balanced
global economy. With collaborative global action, open regulations, and a dedication to
purposeful investments, sustainable finance can lead the way towards a more prosperous and
inclusive future for everyone.
