Markets regulator Securities and Exchange Board of India has proposed to widen the scope of its sustainable finance framework by introducing a new category of instruments.
This category will include social bonds, sustainable bonds, and sustainability-linked bonds, in addition to the current green debt securities. The objective is to provide the issuer with the flexibility to raise funds for environmentally friendly projects.
In a consultation paper released on Friday, SEBI proposed that these bonds will collectively be known as ESG Debt Securities.
SEBI has extended an invitation to the public, seeking their comments and suggestions on the proposed framework by Sept. 6.
The consultation paper said that initial disclosures could be made in the offer document for the securities, while continuous disclosures might be included in annual reports or other mandated formats.
The markets watchdog also suggested that issuers of ESG debt securities and sustainable securitized debt instruments appoint an independent external reviewer or certifier to facilitate transparency and credibility.
The emergence of green debt securities in India has resulted from the growing global focus on sustainable development and climate change mitigation.
In 2015, Yes Bank introduced India’s first infrastructure green bond worth ₹10 million, marking a significant step towards institutionalizing green finance.
In FY23, the Government of India raised about ₹16,000 crore through sovereign green bonds, which touched ₹20,000 crore in FY24.
With the government’s commitment to expanding green finance, the future looks promising for sustainable finance in India.
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