Green Bonds

About Green Bonds

• ‘Green bonds’ are the fixed income financial instruments that are linked to promoting and implementing climate change and environment solutions.
• With this instrument, the issuer of the green bond gets the capital to finance green projects while the investors receive fixed income in the form of interest.
• The first green bond was issued in 2007 by the European Investment Bank.
• India entered the green bond market in 2015 with the YES Bank issuing the first green bond for financing the renewable and clean energy projects.

SEBI guidelines

• In January 2016, the Securities and Exchange Board of India published its official green bonds requirements for Indian issuers.
• India was the second country (after China) to provide national level guidelines.
• As per SEBI’s guidelines a debt security shall be considered as ‘Green’, only if the fund raised through it are utilized for any of the following purposes
  • Renewable and sustainable energy including wind, solar, bioenergy, other sources of energy which use clean technology, etc.
  • Clean transportation including mass/public transportation, etc.
  • Sustainable water management including clean and/or drinking water, water recycling, etc.
  • Climate change adaptation
  • Energy efficiency including efficient and green buildings, etc.
  • Sustainable waste management including recycling, waste-to-energy, efficient disposal of wastage, etc.
  • Sustainable land use
  • Biodiversity conservation.

Issuance in India:

• India in 2019 became the second-largest emerging market globally, after china, for green bonds with $10.3 billion worth of transactions in the first half of 2019.
• A number of government agencies including Indian Renewable Energy Development Agency (IREDA) and Indian Railway Finance Corporation (IRFC) and Banks like State Bank of India entered the green market and issued Green Bonds.

PRELIMS QUESTION

Consider the following statements:
1.Bhutan is the first country in the world to declare itself carbon negative.
2.Maldives held the first underwater cabinet meeting of a country to highlight the threat of climate change.
Which of the statements given above is/are correct?
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2

Answer to Prelims Question