L&T raises Rs 500 cr through first listed ESG bond under new Sebi norms

Larsen & Toubro issues Rs 500 crore ESG-linked bond, the first listed deal under SEBI's new framework, setting benchmarks for transparency and sustainability in India's bond market

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Construction and engineering powerhouse Larsen & Toubro (L&T) has raised Rs 500 crore through an ESG-linked bond issuance, the first listed deal under the Securities and Exchange Board of India’s (Sebi) new framework for sustainability-linked securities, the company said in a press statement on Friday.

 

The transaction, solely arranged by British bank HSBC, comes a day after Sebi announced the regulatory framework designed to promote transparency, accountability, and alignment with international ESG standards. The framework sets out stricter disclosure norms for ESG and sustainability-linked bonds, including mandatory external assessments and measurable environmental or social targets.

 

As part of the deal, the conglomerate has tied the issuance to specific environmental goals, such as reducing the intensity of its freshwater usage and greenhouse gas emissions, the company said. L&T has longer-term targets of water neutrality by 2035 and carbon neutrality by 2040.

 

Under the new operational framework released on Thursday, Sebi has grouped social bonds, sustainability bonds and sustainability-linked bonds under a unified category of ESG debt securities.

 

These instruments will be permitted to carry their respective labels only if the proceeds are used to finance or refinance qualifying projects. The regulator said the move is aimed at helping issuers access funding for sustainable initiatives and close financing gaps for Sustainable Development Goals.

 

While ESG fundraising in India has so far been limited to green bonds by financial institutions and a handful of large corporates, Sebi’s new guidelines are expected to expand the market by standardising disclosures and setting accountability mechanisms.

“We take pride in leading the transition to sustainable finance under SEBI’s new ESG framework,” said a senior spokesperson from L&T.

 

“This bond issuance reinforces our steadfast commitment to sustainable development and responsible business practices while aligning our finances with environmental targets.”

 

“We are pleased to partner with L&T on the first INR Sustainability Linked Bond under Sebi’s guidelines, reinforcing our commitment to supporting the Clean Energy Transition in India,” said HSBC India.

 

“We look forward to partnering with corporates across sectors looking to navigate the paths toward their sustainability goals,” it added.

 

Shares of L&T closed at Rs 3650.00, up 0.23 per cent, while the benchmark Sensex was up 0.92 per cent at 82,188.99 points.