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BFSI Chronicle, 11 Edition September 2022
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Government’s intention to issue green bonds while top 100 listed companies to disclose their business
presenting the Union Budget 2022. Green bonds sustainability report to stock exchanges. This business
will have a sovereign rating, and the proceeds sustainability report outlines many comprehensive
from their sale will be used to fund a variety of ESG related factors like what are the environmental
public-sector projects that would help India reduce risks that could affect the company’s business, how
its carbon emissions. Budget 2022, however, included the policies of the company will affect the society,
no indication of the interest rate at which these green what are its policies on tackling corruption-related
bonds would be issued. activities, and other factors that can directly or
indirectly affect the company’s business.
“Green bonds are debt instruments issued by the
government and are used to fund public sector “ESG investing is long-term investment-based
projects relating to the environment/ climate,” Mrin sustainability of the company along with the
Agarwal, financial educator, and Director, Finsafe proportional balance of a few important non-business
India, a financial education firm. parameters like environment, social (impact) and
governance. This is beyond business capabilities
The Need For Green Bonds and considerations. In recent years, ESG has been
Various governments across the world have gaining high traction as investors are more concerned
determined the increasing need for stern measures about the environment, climate change issues, social
concerning climate change. Since 2008, G20 summits responsibility and governance of the management,”
have seen this topic raised every single time. India, says Mitul Shah, head of research at Reliance
also a part of G20, under the leadership of Prime Securities.
Minister Narendra Modi, pledged in the COP26
climate meeting that India would achieve net-zero How Are Green Bonds Issued?
carbon emissions by 2070. To fuel this ambitious plan, As per the same RBI report, several Indian companies
India needs huge investments, which has resulted in have issued green bonds but most of them are listed
the issue of green bonds since 2015. As per a Reserve on India INX, situated in Gandhinagar, Gujarat. The
Bank of India report titled “Green Finance in India: $650 million green bonds issued by SBI in 2018 were
Progress and Challenges,” until February 12, 2020, listed on INX Gujarat, Luxembourg Stock Exchange
India had an outstanding debt of $16.3 billion in and also Singapore Stock Exchange (SGX). Other
green bonds. companies that have issued green bonds include Yes
Bank (2015), Rural Electrification Corporation (2017)
and Adani Renewable Energy (2019), among others.

Most of the green bonds had a tenure of 5-10 years
but companies like Adani Renewable Energy issued
them with tenure of more than 10 years. In the same
year, ReNew Power issued green bonds for less than
5 years of tenure.

These bonds are meant for high networth individuals
(HNIs) and institutional investors that have a
mandate and wish to invest in sustainable projects
and companies around the world. Retail investors
Green bonds forms part of ESG (Environmental Social have not yet been permitted to invest in these kinds of
Governance) investing and since 2012, the Securities green bonds directly but there is ongoing speculation
and Exchange Board of India (Sebi) has mandated the that the RBI Direct Bond buying programme for

The Institute Of Cost Accountants Of India

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