India’s Securities and Exchange Board (SEBI) plans to enhance the sustainable finance framework in the securities market by launching new ESG-labeled instruments. The proposed framework comprises sustainable securitised debt instruments, sometimes known as “green securitisation,” to diversify investment possibilities for sustainable financing.
According to SEBI’s consultation document, issuers may soon raise funds using social bonds, sustainable bonds, and sustainability-linked bonds, in addition to existing green debt securities. This shift is likely to direct more financing towards initiatives that address environmental, social, and governance (ESG) issues.
Xuan Sheng Ou Yong of BNP Paribas Asset Management in Singapore sees this as a positive move, as it opens up additional potential for directing fixed-income funds into projects other than green bonds.
India’s ESG debt issuance has already surpassed $15.6 billion this year, exceeding the previous high set in 2021. The proposed modifications will allow issuers to seek finance for a broader range of sustainable operations, including renewable energy and water management. SEBI will continue its consultations until September 6, which could result in significant regulatory changes.
These improvements are reasonable, helping Prime Minister Narendra Modi’s green economic goals and potentially mitigating the global downturn in ESG bond issuances, particularly in China.
