Sebi proposes expansion of sustainable fin framework in securities market

Markets regulator Sebi has proposed expansion of the sustainable finance framework in the securities market by introducing a new category of financial instruments.

This category will include Social Bonds, Sustainable Bonds, and Sustainability-linked Bonds in addition to the current green debt securities.

It aims to provide issuers with flexibility in raising funds for projects that align with environmental, social, and governance (ESG) objectives.

In a consultation paper released on Friday, Sebi proposed that issuers, in addition to existing green debt securities, be allowed to raise funds through issuance of social bonds, sustainable bonds, and sustainability-linked bonds.

These bonds will collectively be known as ESG Debt Securities. 

This will enable issuers to raise money for more sustainable projects, assisting in closing the funding gap for the Sustainable Development Goals.

Sebi said it 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 as a mode of raising sustainable finance, in line with global practices.

The consultation paper also addressed the initial and continuous disclosures for sustainable securitised debt instruments that would be based on international frameworks.