SEBI releases Operational Guidelines on Green Bonds

February 7, 2023

Greenwashing is a strategy used by marketing companies to make fraudulent, misleading, and false claims that their products are environmentally friendly. To protect consumers from Greenwashing, the Securities and Exchange Board of India released operational guidelines for green bonds. The guidelines include dos and don’ts related to green debt securities.

Guidelines

No misleading labels shall be used
Tradeoffs shall not be hidden. Tradeoff means giving up one to gain another.
Pick random data to highlight research practices

Major step

From now on SEBI will check if the green debt security issuing company is making the transition towards a greener path. The regulator will watch over the investment made by the company or the measures taken by the company to promote a green environment. Also, the regulator will check if the measures adopted by the company are bringing environmental impacts. It will keep a constant eye on the contributions made by the company is making India a sustainable economy.

Donts

The issuer cannot use the funds raised from green bonds for other purposes. Other purposes mean investments or actions that are not related to the environment.

Challenges for SEBI in green bonds

Most of the green bond issuers are listed in offshore exchanges. This is an attractive method as the foreign exchanges do not come under the jurisdiction of SEBI.
There is no clear definition of “what is green”

« Previous Post Next Post »