SEBI releases consultation paper on sustainable finance

The Securities and Exchange Board of India (SEBI) released a consultation paper on green and blue bonds as a mode of sustainable finance.14 Sustainable finance involves taking into account environmental, social, and governance (ESG) considerations while making investments in the financial sector. Key features are: ▪ Definition of green bonds: Green bonds or green debt securities are currently regulated under the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021. These bonds are used to raise funds for certain projects including renewable energy, clean transportation, and climate change adaptation. The paper has proposed to expand the scope of green bonds for financing other categories including: (i) reduction of air emissions, (ii) greenhouse gas control, (iii) waste recycling, and (iv) design and introduction of recyclable and refurbished products.

▪ Utilisation of funds: The current framework for green bonds or green debt securities does not mandate disclosure of utilisation of funds raised from each debt security issued. It has been proposed that the utilisation of proceeds from each issue of green bonds or green debt securities shall be tracked and disclosed separately or on an aggregated basis for multiple green bonds.

▪ Blue bonds: Blue bonds are debt instruments used to finance investments in oceans and blue economies. The consultation paper noted that India has significant scope for the deployment of blue bonds in different aspects of the blue economy including: (i) oceanic resource mining, (ii) sustainable fishing, (iii) coral degradation, and (iv) National Offshore Wind Energy Policy. The consultation paper has invited comments on whether these initiatives offer any scope for financing through blue bonds