The Effectiveness of Green Bonds in India: A Socio-legal Perspective

Abstract

ABSTRACT

The environment is at the pedestal and there is a crucial need to promote corporate social responsibility. In the speech for Union Budget 2022-2023, the finance minister, Smt. Nirmala Sitharaman presented the plan for issuing green bonds in India. These are the securities issued to finance the projects related to sustainable, environment development and improvement. Presently, the carbon emissions have intensely affected the environment. Though, the concept of green bonds in India is not newly emerged one. Earlier, the help was taken from internationally set standards in regard to the same. Later, even the Securities and Exchange Board of India (SEBI) issued a circular regarding the disclosure requirements for green bonds as well as listing them on the market.

At present, it is regulated through SEBI (Issue and Listing of Debt Securities) Regulations, 2008 since it is a debt security. With green bonds being issued, there are certain problems that might crop up like what will constitute as ‘green’ or the transparency in selecting the project, in proceeds. Since there is lack of uniformed mechanism, it is essential to look at green bonds from a holistic point of understanding to comprehend its usage and application in India. Moreover, there is the issues related to the uncertainty of the green projects and the concept like greenwashing which is a deception that the funds are being allocated towards the greener projects. With a crucial turn of events towards climate change, green bonds have presented themselves with benefits and certain challenges which are essential to be addressed for a better legal compliance and environment.

KEYWORDS: green bonds, SEBI, ICMA Principles, disclosures, LODR Regulations