Why in News?

• Recently, the Union Minister for Finance & Corporate Affairs has approved the final Sovereign Green Bonds Framework of India.

Sovereign Green Bonds Framework

• Under the framework Sovereign Green Bonds will be issued for mobilizing resources for green projects.
• A ‘green project’ classification is based on the principles of energy efficiency, reduced carbon & GHG emissions etc.
• Eligible projects under the framework:
  • Renewable energy, water and waste management, clean transportation, green building etc.
• Ineligible projects under the framework:
  • Nuclear power generation, landfill projects, direct waste incineration, hydropower plants larger than 25 MW etc.
• Proceeds will be deposited with Consolidated Fund of India.
• Green Finance Working Committee constituted to validate key decisions on issuance of SGB.
• The framework has been rated ‘Medium Green’, with a “Good” governance score by a Norway-based CICERO.

About Green Bonds

• A green bond is a fixed-price instrument meant to support environment friendly or climate-related projects.
• A Green Bond issued by a Government is termed as Sovereign Green Bond.
• India’s First Green Bond was issued by Yes Bank Ltd in 2015.
• SEBI regulates the disclosure norms of Green Bonds since 2017.
• According to the Climate Bonds Initiative, Indian entities have issued green bonds for over $18 billion.

Significance

• Catalyze domestic markets and provide impetus to institutional investors.
• Powerful tool to create awareness about climate action & sustainable development.
• Positive Public Relations, helps in enhancing an issuer’s reputation.