Capital markets regulator Securities and Exchange Board of India (Sebi) on Thursday proposed new norms for issuing and listing of green bonds, with an aim towards financing of green projects in India worth $2.5 trillion by 2030. Sebi has invited public comments on these norms by December 18.
Sebi said issuance of green bonds in India does not require any amendment to the existing regulations, but mandated the issuer of green bonds to disclose additional information on the criteria of identifying projects, assets or activities as ‘green’ as prescribed under the Green Bond Principles, 2015.
Sebi noted broad areas — renewable and sustainable energy, clean transportation, sustainable water management, climate change, biodiversity conservation, among others — where money may be invested. In addition, the regulator has mandated companies to furnish clear details on use of proceeds in the offer document and state periodic reporting of fund allocation. Companies will also be required to provide details of the portfolio, assets, and projects that are identified for re-financing.
According to the concept paper, Sebi described green bonds similar to any other debt instrument issued by an entity for raising funds. However, proceeds are ‘ear-marked’ strictly towards financing green projects, Sebi said, adding that the current description is based on market practice and there is no standard definition of green bonds.
India’s Intended Nationally Determined Contribution document puts forth the stated targets for the country’s contribution towards climate improvement and following a low-carbon path to progress.
“The document also impresses upon the need of financing needs for achieving the stated goals, where a preliminary estimate suggests that at least $2.5 trillion (at 2014-15 prices) will be required for meeting India’s climate change actions between now and 2030,” Sebi said in the paper.
“In this regard, the document talks about the introduction of tax-free infrastructure bonds of Rs 50 billion ($794 million) for funding of renewable energy projects during 2015-16,” Sebi said.
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