With an aim to help meet huge financing requirements worth USD 2.5 trillion for climate change actions in India by 2030, Sebi today proposed new norms for issuance and listing of green bonds.
The proposed norms mainly relate to disclosure requirements by the companies intending to issue such bonds, as also to the periodic reporting of fund allocation.
"In addition to reporting on the use of proceeds issuers shall also provide, at least on an annual basis, a list of projects to which Green Bond proceeds have been allocated.
This may also include the details of expected environmental impact of such projects," Sebi said in a draft paper. The move follows after the board of Securities and Exchange Board of India (Sebi) earlier this week approved a proposal to issue new norms in this regard. The comments have been invited till December 18.
The regulator said issuance of Green Bonds in India does not require any amendment to the existing Sebi regulations for issuance of corporate bonds, and its Issue and Listing of Debt Securities) regulations. The issue, listing and disclosure requirements as prescribed under existing regulations for debt securities will continue to be applicable, like any regular corporate bond issuance.
However, for designating an issue of corporate bonds as green bonds, in addition to the compliance with the requirements under the existing regulations, an issuer will have to disclose in the offer document certain additional information about the green bonds, which have been based upon the Green Bond Principles, 2015.
A green bond is like any other bond where a debt instrument is issued by an entity for raising funds from investors. However what differentiates a green bond from other bonds is that the proceeds of a Green Bond offering are 'ear-marked' for use towards financing green projects. As of now, there is no standard definition of green bonds and the one that is being currently used is based on market practice, Sebi said.
India's Intended Nationally Determined Contribution document puts forth the stated targets for 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 USD 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 (USD 794 million) for funding of renewable energy projects during 2015-16," it added.