SEBI formalises guidelines for issuance of Green Debt Securities in India, by Abhirup Ghosh

The Securities and Exchange Board of India (SEBI) on 30th May, 2017 came out with a circular stating the disclosure requirements for issuance and listing of Green Debt Securities in India (hereinafter referred to as “Circular”)[1]. Earlier in December, 2015, SEBI had come out with a concept paper for issuance of Green Bonds in India (hereinafter referred to as “Concept Paper”)[2]. The Concept Paper brought out the need for enhanced disclosures for issuance of green bonds so as to differentiate it from other form of debt securities issued and listed in India and the Circular is largely in line with the concept paper.

In our earlier write up on the topic[3], we had covered the state of the Green Bonds of India and in this article we intend to discuss the contents of the circular and compare it with the international precedents.

Definition of “Green”

The Circular defines the term “Green” or “Green Debt Securities” in the following manner:

A Debt Security shall be considered as “Green‟ or “Green Debt Securities‟, if the funds raised through issuance of the debt securities are to be utilised for project(s) and/or asset(s) falling under any of the following broad categories:

  1. Renewable and sustainable energy including wind, solar, bioenergy, other sources of energy which use clean technology etc.
  2. Clean transportation including mass/public transportation etc.
  3. Sustainable water management including clean and/or drinking water, water recycling etc.
  4. Climate change adaptation
  5. Energy efficiency including efficient and green buildings etc.
  6. Sustainable waste management including recycling, waste to energy, efficient disposal of wastage etc.
  7. Sustainable land use including sustainable forestry and agriculture, afforestation etc.
  8. Biodiversity conservation

Any other category as may be specified by Board, from time to time.

This is same as what was provided under the Concept Paper. Internationally, Green Bond issuances are largely guided by standards issued by various developmental agencies. The Climate Bonds Standards[4] issued by the Climate Bonds Initiative is the widely accepted one. These Standards provide for a much more of elaborate list of sectors which would qualify to be eligible projects for Climate Bonds issuances and they are as follows:

Energy Low Carbon Buildings Industry & Energy Intensive Commercial Waste & Pollution Control


•     Solar

•     Wind

•     Geothermal

•     Hydropower

•     Bioenergy

•     Wave and Tidal

•     Energy distribution & management

•     Dedicated transmission

•     Residential

•     Commercial

•     Retrofit

•     Products for building low carbon buildings

•     Manufacturing

•     Energy efficiency processes

•     Energy efficiency products

•     Retail and wholesale

•     Data centres

•     Process & fugitive emissions

•     Energy efficient appliances

•     Combined heat & power

•     Recycling facilities

•     Recycled products & circular economy

•     Waste to energy

•     Methane management

•     Geosequestration



Information Technology & Communications


Nature Based Assets Water
•     Rail

•     Vehicles

•     Mass transit

•     Bus rapid transport

•     Water-bourne transport

•     Alternative fuel infrastructure

•     Power management

•     Broadband

•     Resource efficiency

•     Teleconferencing

•     Agriculture land

•     Forests (managed and unmanaged)

•     Wetlands

•     Degraded land

•     Other land uses (managed and unmanaged)

•     Fisheries and acquaculture

•     Coastal infrastructure

•     Flood defences

•     Water distribution infrastructure

•     Water capture & storage infrastructure

•     Water treatment plants

•     Assets in energy & production industries


The above list is much clarificatory in nature as compared to the broad categories laid down by SEBI.

Independent reviewer/ certifier

Internationally, for all issuance of Green Bonds or Climate Bonds, an independent reviewer/ certifier has to be appointed mandatorily who certifies whether the targeted project assets qualify to be eligible assets or not. However, as per the Circular for any issuance of Green Debt Securities in India, the issuer may use its discretion to appoint an independent reviewer/ certifier and it is not a mandatory requirement. There is no deviation from the Concept Paper in this regard.

Disclosure requirements

In order to issue Green Debt Securities, the provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 are to be complied with. Therefore, the disclosure requirements provided therein shall have to be adhered to; additionally, the following details shall also have to be disclosed in the offer document:

  1. A statement on environmental objectives of the issue of Green Debt Securities;
  2. Brief details of decision-making process issuer has followed/would follow for determining the eligibility of project(s) and/or asset(s), for which the proceeds are been raised through issuance of Green Debt Securities. An indicative details to be provided is as under:
    1. Process followed/ to be followed for determining how the project(s) and/or asset(s) fit within the eligible green projects;
    2. The criteria, making the project(s) and/or asset(s) eligible for using the Green Debt Securities proceeds; and
    3. Environmental sustainability objectives of the proposed green investment.
  3. Details of the system/procedures to be employed for tracking the deployment of the proceeds of the issue.
  4. Details of the project(s) and/or asset(s) or areas where the issuer, proposes to utilise the proceeds of the issue of Green Debt Securities, including towards refinancing of existing green project(s) and/or asset(s), if any.
  5. If the issuer appoints an independent third party reviewer/certifier, for reviewing /certifying the processes including project evaluation and selection criteria, project categories eligible for financing by Green Debt Securities, etc. then such appointment of such reviewer/ certifier shall have to be disclosure in the offer document.

These disclosures requirements are similar to that prescribed under international principles.

Apart from the initial disclosures there are some details which have to be disclosed on a continuing basis in the annual report or financial results and they are:

  1. Details to be provided in the half-yearly and annual financial statements:
    1. Utilisation of the proceeds of the issue, as per the tracking done by the issuer using the internal process as disclosed in offer document/disclosure document. The utilisation of the proceeds shall be verified by the report of an external auditor, to verify the internal tracking method and the allocation of funds towards the project(s) and/or asset(s), from the proceeds of Green Debt Securities.
    2. Details of unutilized proceeds.
  2. Details to be provided in the annual report:
    1. List of project(s) and/or asset(s) to which proceeds of the Green Debt Securities have been allocated/invested including a brief description of such project(s) and/or asset(s) and the amounts disbursed. However, where confidentiality agreements limit the amount of detail that can be made available about specific project(s) and/or asset(s), information shall be presented about the areas in which such project(s) and/or asset(s) fall into.
    2. Qualitative performance indicators and, where feasible, quantitative performance measures of the environmental impact of the project(s) and/or asset(s). If the quantitative benefits/impact cannot be ascertained, then the said fact may be appropriately disclosed along with the reasons for non-ascertainment of the benefits/impact on the environment.
    3. Methods and the key underlying assumptions used in preparation of the performance indicators and metrics.

In addition to the above, if the issuer of the Green Debt Securities or any agent appointed by the issuer follows any globally accepted standards, then such shall also have to be disclosed in the offer document of the securities.

Responsibilities of the issuer

In addition to the responsibilities entrusted on the issuer of debt securities under SEBI (ILDS) Regulations, the following additional responsibilities have been entrusted upon the issuers of Green Debt Securities under the Circular:

  1. The issuer must maintain a decision-making process which it uses to determine the continuing eligibility of the project(s) and/or asset(s), which would include, without limitation, a statement on the environmental objectives of the Green Debt Securities and a process to determine whether the project(s) and/or asset(s) meet the eligibility requirements.
  2. The issuer must ensure that all project(s) and/or asset(s) funded by the proceeds of Green Debt Securities, meet the documented objectives of Green Debt Securities.
  3. The issuer utilise the proceeds only for the stated purpose, as disclosed in the offer document.

These responsibilities are also in line with the responsibilities entrusted upon the issuers of Green Bonds or Climate Bonds internationally, either directly or indirectly, under the Climate Bonds Standards.


India is one of popular markets when it comes to issuance of Green Bonds. It featured in the 7th position in terms of issuances in 2016 with issuance of USD 2.7 billion, behind United States, France, China, Germany, Netherlands and Sweden. The future prospects of Green Bonds in India also seems bright, considering the ambitious target set by India’s Intended Nationally Determined Contribution (INDC) for achieving climate change object and funding requirement of USD 2.5 trillion that is envisaged by INDC for meeting the desired objectives. On such pretext, some definitive guidelines will certainly do a world of good for the issuers in the country.






by Abhirup Ghosh (

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