Indian market regulator Securities Exchange Board of India has proposed expand the sustainable finance framework in the securities market with issuance of ESG debt securities.
This new category of financial securities will include Social Bonds, Sustainable Bonds, and Sustainability-linked Bonds in addition to the current green debt securities. The goal is to provide issuer the flexibility to raise funds for projects that align with environmental, social, and governance objectives.
Issuers, in addition to existing green debt securities, will be allowed to raise funds through issuance of social bonds, sustainable bonds, and sustainability-linked bonds. These bonds will be known as ESG Debt Securities, SEBI said in a consultation paper released on Friday.
SEBI has invited comments and suggestions from the public on the consultation paper by Sept. 6.
SEBI received representations from market participants including the Confederation of Indian Industry to expand the scope of the regulatory framework pertaining to sustainable finance to include Social Bonds, in addition to existing Green Debt Securities , the market regulator said.
On disclosure about these new securities, initial disclosures could be made in the offer document for the securities, while continuous disclosures might be included in annual reports or other mandated formats, the consultation paper said.
The markets watchdog also suggested that issuers of ESG debt securities and sustainable securitised debt instruments appoint an independent external reviewer or certifier, to facilitate transparency and credibility.
The review could take various forms including, second-party opinions, verification, certification, or scoring/ rating.
With inputs from PTI
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