Securities and Exchange Board of India (SEBI) strengthened the framework for green bonds by introducing the concept of ‘blue’ and ‘yellow’ bonds as new modes of sustainable finance.
Key points
- SEBII has notified the inclusion of specific subcategories (blue and yellow) within the definition of green debt security.
- Blue bonds are modes of sustainable finance raised for sustainable maritime sector including sustainable fishing, sustainable water management etc.
- Yellow bonds are modes of sustainable finance raised for solar energy generation and the associated upstream and downstream industries.
- The SEBI has amended the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021.
- These regulations may be called the Securities and Exchange Board of India (Issue and Listing of NonConvertible Securities) (Amendment) Regulations, 2023.
- The main objective of this amendment is to expanding the definition of ‘green debt security’ and incidental matters.
- It has also included new modes of sustainable finance in relation to pollution prevention and control and eco-efficient products.
- These actions were taken against the backdrop of growing interest in sustainable finance both in India and around the world.
- They also aim to align the existing framework for green debt securities (GBP) with the updated Green Bond Principles, which are recognized by IOSCO.
Green Debt Securities
- The regulatory framework defines Green Debt Securities as debt securities issued for raising funds that are to be utilised for projects or assets falling under certain categories.
- In November 2022, the SEBI released a consultation paper which stated that one of its main obstacles to further growth was a consistent, robust approach to identifying what is ‘green’.
