Nirmala Sitharaman
New Delhi: Union Minister for Finance and Corporate Affairs Nirmala Sitharaman today approved the final Sovereign Green Bonds framework of India. Such bonds are financial instruments that generate proceeds for investment in environmentally sustainable and climate-suitable projects. By virtue of their indication towards environmental sustainability, these bonds command a relatively lower cost of capital vis-à-vis regular bonds and necessitate credibility and commitments associated with the process of raising them.
In the above context, India’s first Sovereign Green Bonds framework was formulated and as per the provisions of the framework, Green Finance Working Committee (GFWC) was constituted to validate key decisions on their issuance.
Further, CICERO, an independent and globally renowned Norway-based Second Party Opinion (SPO) provider, was appointed to evaluate India’s green bonds framework and certify alignment of the framework with ICMA’s Green Bond Principles and international best practices. After due deliberation and consideration, CICERO has rated such framework as ‘Medium Green’ with a “Good” governance score.
The Finance Ministry said the approval will further strengthen India’s commitment towards its Nationally Determined Contribution (NDCs) targets, adopted under the Paris Agreement, and help in attracting global and domestic investments in eligible green projects. The proceeds generated from the issuance of such bonds will be deployed in Public Sector projects which help in reducing the carbon intensity of the economy.
The Framework comes close in the footsteps of India’s commitments under “Panchamrit” as elucidated by the Prime Minister, Narendra Modi, at COP26 in Glasgow in November 2021. “The approval is the fulfilment of the announcement in the Union Budget FY 2022-23 by the Union Finance Minister that Sovereign Green Bonds will be issued for mobilising resources for green projects,” the Finance Ministry stated.
– global bihari bureau
