SEBI and the Reform on Sustainable Finance (Part 2 of 3)

Abstract

In the backdrop of increasing interest in sustainable finance around the globe as well as in domestic market, SEBI after extensive consultation with market participants revised its regulatory framework for issuance and listing of green debt securities.

The Regulatory framework was revised to enhance the scope of definition of green debt security to include pollution prevention and control and eco efficient products within the ambit of eligible categories to raise funds through issuance of green debt securities. Further, the concept of Blue Bonds (related to sustainable water management and marine sector), Yellow Bonds (related to solar energy) and Transition Bonds (related to transitioning to a more sustainable form of operations) was introduced as sub categories of green debt security.

To facilitate transparency and informed investment decision making, SEBI also updated the initial and continuous disclosure requirements for issuance and listing of green debt securities. Appointment of third party auditor/certifier for reviewing/certifying the processes for project evaluation and selection criteria, post – issue management of the use of the proceeds raised through issuing green debt security etc. , impact reporting and disclosure of major elements of Business Responsibility and Sustainability Reporting are some of the major changes to the extant disclosure requirements.