Sebi puts in place disclosure norms for issuance, listing of green bonds

Disclosure framework comes after Sebi's board approved norms for securities in stock markets

To help companies raise funds through green bonds for investment in renewable energy space, regulator Sebi today put in place disclosure norms for issuance and listing of such bonds.

The issuer of a green bond will have to make a disclosure about environmental objectives of the issue of such securities in the offer documents, Securities and Exchange Board of India (Sebi) said in a circular.

Besides, issues would have to provide details of the systems and procedures to be employed for tracking the proceeds of the issue, including the investments made and earmarked for eligible projects in the offer documents.

In addition, the issuer would have to make disclosures including the use of proceeds, a list of projects to which green bond proceeds have been allocated in the annual report and periodical filings made to the stock exchanges.

The issuer can appoint an independent third party reviewer, certifier or validator for reviewing, certifying and validating the pre-issuance and post-issuance process including project evaluation and selection criteria. However, this has been kept optional.

The disclosure framework comes after Sebi's board in January 2016 had approved norms for issuance and listing of such securities in the stock market.

The move is aimed at helping meet the huge financing requirements worth USD 2.5 trillion for climate change actions in India by 2030.

A green bond is like any other bond where a debt instrument is issued by an entity for raising funds from investors.

However, what differentiates a green bond from other bonds is that the proceeds of a Green Bond offering are 'ear- marked' for use towards financing green projects.

According to Sebi, a debt security will be considered green bonds if the funds raised through it will be used for renewable and sustainable energy including the wind, solar, bioenergy, other sources of energy which use clean technology.

Among others, such funds would be used for clean transportation; sustainable water management; climate change adaptation; energy efficiency including efficient and green buildings; and sustainable waste management.