The country’s first set of sovereign green bonds (SGBs) are likely to be issued during January-March 2023, Pankaj Chaudhary, Minister of State for Finance, has said.

The proceeds will be deployed in public sector projects that help reduce carbon intensity of the economy, Chaudhary said in a written reply to a Rajya Sabha question on green bonds.

The resources mobilised by the government through sovereign green bonds will form part of the Centre’s overall market borrowings in 2022-23. 

Green bonds are financial instruments that generate proceeds for investment in environmentally sustainable and climate-suitable projects. A sovereign green bond is a debt instrument issued by the Central or State government to borrow money from investors with the commitment that the mobilised fund will be spent on climate or ecosystem related activities.

By virtue of their indication towards environmental sustainability, green bonds command a relatively lower cost of capital vis-à-vis regular bonds and necessitates credibility and commitments associated with the process of raising bonds.

It maybe recalled that Finance & Corporate Affairs Minister Nirmala Sitharaman had last month approved the Sovereign Green Bonds framework of India. 

NDC target

This approval is expected to further strengthen India’s commitment towards its Nationally Determined Contribution (NDCs) targets, adopted under the Paris Agreement, and help in attracting global and domestic investments in eligible green projects.

The Framework comes close on the footsteps of India’s commitments under “Panchamrit” as elucidated by the Prime Minister, Narendra Modi, at COP26 at Glasgow in November 2021.

Sitharaman had in this year’s budget announced that SGBs will be issued for mobilising resources for green projects. 

CICERO, an independent and globally renowned Norway-based second party opinion provider, was appointed to evaluate India’s green bonds framework and certify alignment of the framework with international best practices. CICERO has rated India’s Green Bonds Framework as ‘Medium Green’ with a “Good” governance score.

Meanwhile, Sanjeev Kumar Singhal, Chairman, Sustainability Reporting Standards Board of India, said the CA Institute has finalised the assurance standard on sustainability related information. “It will enable auditors to express an opinion on sustainability related aspects such as green bonds, BRSR and SDG ,” he said. 

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