India’s first Sovereign Green Bonds Framework receives approval- All you need to Know

Green Bonds are the financial instruments that generate proceeds for investment in environmentally-sustainable and climate-sustainable projects.

India’s first Sovereign Green Bonds Framework
India’s first Sovereign Green Bonds Framework

Green Bond: The Union Finance Minister Nirmala Sitharaman approved the final sovereign green bonds framework of India on November 9, 2022. Notably, the approval of India’s first Sovereign Green Bonds is the fulfillment of the announcement in the Union Budget FY02022-23 by the Union Finance Minister that the sovereign green bonds will be issued for mobilizing the resources for green projects.

Sovereign Green Bonds Framework also comes close in the footsteps of India’s commitment under Panchamrit as elucidated by Prime Minister Narendra Modi at COP26 in Glasgow in November 2021. Know more about Sovereign Green Bonds and what is its significance.

What is Sovereign Green Bonds Framework?

Green Bonds are the financial instruments that generate proceeds for investment in environmentally-sustainable and climate-sustainable projects.

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

Sovereign Green Bonds Framework: Significance

According to the statement released by the Finance Ministry, the approval will further strengthen India’s commitment towards its Nationally Determined Contribution (NDC) targets that are adopted under the Paris Agreement and will help in attracting global and domestic investments in eligible green projects.

The proceeds that will be generated from the issuance of such bonds will be deployed in public sector projects which will help in reducing the carbon intensity of the economy.

Sovereign Green Bonds Framework: Key Points

1. India’s first Sovereign Green Bonds Framework was formulated and according to the provisions of the framework, Green Finance Working Committee was constituted to validate the key decisions on the issuance of Sovereign Green Bonds.

2. An Independent and Norway-based second-party opinion (SPO) provider was appointed to evaluate India’s green bonds framework and certify the alignment of the framework with ICMA’s Green Bond Principles and International Best Practices.

3. After due deliberation and consideration, India’s green bonds framework was rated as ‘Medium Green’ with a ‘Good Governance Score’.

What are Sovereign Green Bonds announced in Budget 2022? | Explainer of the Day

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