The financing needs of renewable energy space in the country require new channels to be explored which can provide not only the requisite financing, but may also help in reducing the cost of the capital. Further, India’s Intended Nationally Determined Contribution (INDC) document puts forth the stated targets for India’s contribution towards climate improvement and following a low carbon path to progress.
The Securities and Exchange Borad of India(SEBI) Board in January this year approved the proposal for disclosure requirements for issuance and listing of Green Bonds, which have been formalised after consultation with the public.
Salient features on Green Bonds are as under:
-The issuance and listing of Green Bonds will be governed under SEBI (Issue and Listing of Debt Securities) Regulations, 2008 and such issuer of Green Bond shall have to make incremental disclosures/follow procedures.
-The definition of green bonds may be as specified by SEBI from time to time.
-Requirement of independent third party reviewer/certifier/validator, for reviewing/certifying/validating the pre-issuance and post-issuance process including project evaluation and selection criteria. However, this is kept optional.
-Escrow account is not mandatory, however issuer shall provide the details of the system/procedures to be employed for tracking the proceeds of the issue including the investments made and/or investments earmarked for eligible projects and the same shall be verified by the external auditors.
-Issuer to make disclosures including use of proceeds, list of projects to which Green Bond proceeds have been allocated etc. in the annual report/periodical filings made to the Stock Exchanges.
-It is expected that these measures by SEBI will facilitate in taking investment decisions by investors who have a mandate to focus on green investments and will also provide uniformity in disclosure standards.