India’s First “Green Bonds” Framework Finalised by Govt.

Smt. Nirmala Sitharaman, Union Minister for Finance and Corporate Affairs, approved India’s first sovereign “Green Bond” framework.

India's First "Green Bonds" Framework Finalised by Govt.

This approval will strengthen the Paris Agreement’s NDC targets and attract foreign and domestic capital to eligible green projects. These bonds will fund public-sector carbon reduction initiatives. The Framework closely follows India’s “Panchamrit” commitments, which Prime Minister Narendra Modi explained at COP26 in Glasgow in November 2021. The approval fulfils the Union Finance Minister’s pledge to issue Sovereign Green Bonds to fund green projects in the FY 2022–2023 Union Budget.

The Green Finance Working Committee (GFWC) was established to approve sovereign green bond issuance decisions in accordance with India’s first sovereign green bond framework. CICERO, an independent and well-known Second Party Opinion (SPO) provider based in Norway, was also chosen to assess India’s green bond framework and certify compliance with the ICMA’s Green Bond Principles and global best practises. CICERO gave India’s Green Bonds Framework “Good” governance and “Medium Green” ratings after careful consideration.

What is “Green Bond”

Green bonds are financial products that produce income for projects that promote environmental sustainability and climate adaptation. Green bonds have a lower cost of capital than regular bonds due to their indication of environmental sustainability, but they also require greater credibility and commitments during the bond-raising process.

Green bonds are a form of environmentally responsible debt that can be issued by either public or private entities for the purpose of funding investments that are also environmentally responsible. There are a few different names for green bonds, including “sustainable bonds” and “eco-bonds.” Green bonds can be used to provide funding for a diverse range of investments that are designed to reduce their impact on the environment.

Green bonds are issued to raise capital for environmentally friendly projects, which typically require financing in order to get off the ground. This type of financing can come in the form of bonds. “In general, green bonds will be used to finance projects that do not destroy or significantly degrade the environment; do not encourage excessive consumption of natural resources; and do not undermine efforts to achieve sustainable development,” it says in the Green Bond Principles. “Green bonds will be used to finance projects that do not destroy or significantly degrade the environment.”

GOI Press Release dt. 09/11/2022: India’s First “Green Bonds” Framework Finalised by Govt.

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