Brief Introduction:
India’s commitment to the preservation of the environment is enshrined in Article 48-A of the constitution. Over the years, India has taken steps both at national and sub-national levels to balance environmental sustainability with economic growth. Initiatives such as the Namami Gange Mission, plastic waste management, National Clean Air Programme are a few examples of these. As a populous, tropical developing country, India faces a bigger challenge in coping with the consequences of climate change than most other countries. Climate Change is a global phenomenon but with local consequences. Realizing this, the National Action Plan on Climate Change (NAPCC) was launched in 2008 with eight National Missions. The NAPCC aims at fulfilling developmental objectives with a focus, inter alia, on reducing emission intensity of the economy, improving energy efficiency, increasing the forest cover and developing sustainable habitat standards. The National Adaptation Fund on Climate Change (NAFCC) was launched in 2015 with an objective to enhance the adaptive capacity of the most vulnerable sections of the population and ecosystems focusing on the climate-sensitive sectors such as agriculture, water, forestry and the coastal and Himalayan ecosystem.
Definition of Green Bond
- Issuer shall define and disclose in their offer document, the criteria for identification as ‘green’ i.e. what projects, assets or activities will be considered ‘eligible for financing’ and quantum of funds to be spent on the projects/assets/activities.
- For assigning the status of the bonds as Green, the broad categories of areas where such monies may be invested may be one or more of the following:
- Renewable and sustainable energy (wind, solar etc.)
- Clean transportation (mass transportation)
- Sustainable water management (clean and/or drinking water, water recycling etc.)
- Climate change adaptation
- Energy efficiency (efficient and green buildings)
- Sustainable waste management (recycling, waste to energy etc.)
- Sustainable land use (including sustainable forestry and agriculture, afforestation etc.)
- Biodiversity conservation However, it is to be noted that this is an indicative list and may include other categories as specified by Board.
Legal Framework:
- Framework for Sovereign Green Bonds.
- Revised Disclosure requirements for issuance and listing of Green Debt Securities.
- SEBI (Issue and Listing of Non-Convertible Securities) Regulations
Procedure for raising green bond
- In-Principle Approval: Obtain in-principle approval from the exchange (NSE or BSE) prior to the issue opening.
- Offer Document Disclosures: The offer document must include:
- Statement on environmental sustainability objectives.
- Decision-making process for project eligibility.
- System/procedures for tracking the deployment of proceeds.
- Appointment of Intermediaries: Appoint a Merchant Banker(mandatory for private placements) and a Debenture Trustee.
- Credit Rating: Obtain a credit rating from at least one SEBI-registered agency.
- Listing Application: Submit the application on the exchange’s portal (e.g., NSE NEAPS) within the specified timeline (usually 15 days from allotment for private placements).
Post-Listing Obligations
- Utilization Reporting: Disclose the utilization of proceeds in annual reports and half-yearly financial results, verified by an external auditor.
- Impact Reporting: Provide qualitative and, where feasible, quantitative performance indicators of the environmental impact (e.g., CO2 emissions avoided).
- BRSR Disclosures: Issuers must disclose specific elements of the Business Responsibility and Sustainability Report (BRSR), regardless of their market capitalization.
- Green washing Prevention: Adhere to SEBI’s “Dos and Don’ts” to avoid misleading claims about the bond’s environmental benefits.
CONTACT INFORMATION
Ladda Bhutada & Associates | 360 CompanyBecho Private Limited
- CS IP: Pramodkumar Ladda
- Address: Office No. 10, No. 55, Sukhniwas, 15 August Chowk, Mangalwar Peth, Pune – 411011
- Office Cell: +9199220 724607, 93098 45448
- Email: info@csladda.com
