The Asian Development Bank (ADB) on Wednesday approved a $500 million loan to support India’s economic growth by promoting environmentally sustainable infrastructure.

The ADB loan, with a sovereign guarantee, to India Infrastructure Finance Company Limited (IIFCL) will advance sustainable infrastructure development. This will help IIFCL provide long-term capital for infrastructure projects focusing on connectivity and energy transition as well as under-resourced sectors like urban projects, education, and health care. IIFCL can be an anchor government investor that attracts private sector entities to join a consortium of lenders to finance these initiatives.

The Financing Environmentally Sustainable Growth in Infrastructure Project will build IIFCL’s institutional capacity to integrate green and best practices into infrastructure projects. A release says a sustainability unit, environmental sustainability framework, and scoring method to assess the projects’ sustainability ratings will also be established.

India is among the world’s most impacted economies due to climate change, and intensifying hazards—such as floods, droughts, and cyclones—require infrastructure projects designed to mitigate these risks. However, there is a lack of sufficient funding and risk-sharing mechanisms within the local financial market for these types of projects. The country is facing a $1 trillion climate financing gap that the public sector cannot meet alone, the release said.

“India’s economy is one of the fastest growing in the world. Critical to this process are robust infrastructure that aligns with the country’s climate commitments.” said ADB Principal Finance Sector Specialist Sanjeev Kaushik. “ADB is strengthening support to the government in this area to ensure that India’s economic development will be inclusive and sustainable.”