Sebi prescribes additional disclosures for issuing transition bonds

Disclosures on implementation and utilisation of funds aim to ensure there is no misallocation

The Securities and Exchange Board of India (Sebi) has prescribed additional disclosures for issuance of transition bonds, a sub-category of green debt securities, to check misallocation.

The markets regulator has asked companies to identify interim targets like by how much they plan to reduce the emissions, project implementation strategy, technology for implementation, and the mechanism to oversee the utilisation of the funds raised through transition bonds.

In a circular dated May 4, Sebi also recommended issuers to form a committee to oversee the implementation and ensure timely completion of the defined targets.

Issuers have also been directed to use the denotation GB-T for differentiating transition bonds.

The regulator earlier revised the definition of green debt security within which transition bonds are the funds raised for transitioning to a more sustainable form of operations.

Further, the issuers will have to disclose the transition plan along with the brief of the progress of the implementation in their annual reports.

In case of any revisions in the transition plan, the company will have to disclose it to the stock exchanges along with an explanation for the revision.

Sebi noted that the additional requirements will facilitate transparency and informed decision making amongst investors, ensuring that the funds raised through transition bonds are not misallocated.

Stock exchanges have been directed to monitor such continuous disclosures.