×

UPSC Courses

DNA banner

DAILY NEWS ANALYSIS

  • 15 November, 2022

  • 5 Min Read

India’s First Sovereign Green Bonds Framework

India’s First Sovereign Green Bonds Framework

  • The final Sovereign Green Bonds Framework of India was just authorised by the Union Minister for Finance & Corporate Affairs.
  • It will be possible to raise money for green projects by issuing sovereign green bonds.

What is the framework for sovereign green bonds?

  • The Framework closely follows the Prime Minister's explanation of India's "Panchamrit" pledges at the Conference of Parties (COP) 26 in Glasgow in November 2021.
  • India's dedication to its Nationally Determined Contribution (NDC) targets, set forth under the Paris Agreement, would be further strengthened.
  • In order to approve important choices for the issuing of Sovereign Green Bonds, the Green Finance Working Committee (GFWC) was established.
  • The framework has received a "Good" governance score and a "Medium Green" rating from the independent second opinion provider CICERO in Norway.
  • The project or solution is given the "Medium Green" classification if it "represents important progress towards the long-term objective, but is not quite there yet."
  • Both biomass-based renewable energy projects that depend on feedstock from "protected areas" and all fossil fuel-related initiatives have been excluded from the framework.

Sovereign Green Bonds: What Are They?

  • Companies, nations, and international organisations all offer green bonds, which guarantee fixed-income payments to investors while only funding initiatives that benefit the environment or the climate.
  • The initiatives could involve, among other things, green buildings, sustainable transportation, and renewable energy.
  • These bonds' earnings are designated for environmental projects. This is different from regular bonds, which allow the issuer to use the proceeds for a variety of things.
  • According to the London-based Climate Bonds Initiative, by the end of 2020, 24 national governments would have issued sovereign green, social, and sustainability bonds worth a total of USD 111 billion.

Sovereign green bonds' advantages

  • Governments and authorities are sent a strong signal of intent about climate change and sustainable development by sovereign green issuance.
  • Sovereign issuance can assist jump-start these significant capital inflows, as the International Energy Agency (IEA) World Energy Outlook 2021 estimates that 70% of the additional USD 4 trillion investment to reach net-zero is necessary in emerging/developing nations.
  • The formation of a sovereign green benchmark could eventually result in the emergence of a thriving market for the issuance of green bonds by foreign investors.

International Status:

  • Europe accounts for almost half of the estimated USD 40 trillion in Environmental, Social, and Governance (ESG) funds.
  • By 2025, it is predicted that around one-third of all global assets under management will be made up of ESG assets.
  • Around USD 2 trillion is invested in ESG debt funds, of which over 80% are "environmental" or green bonds, with the remaining funds invested in social and sustainability bonds.

National Status:

  • Indian organisations have issued green bonds worth more than USD 18 billion, according to the Climate Bonds Initiative, a global organisation striving to mobilise funds for climate change.

Source: The Indian Express


Pradhan Mantri Suryodaya Yojana

Recently, Prime Minister announced Pradhan Mantri Suryodaya Yojana under which 1 crore households will get rooftop solar power systems. India’s Status of Current Solar Capacity India currently stands at 4th place globally in solar power capacity. As per Ministry of New an

Foreign Contribution Regulation Act (FCRA)- NGO 

The Foreign Contribution Regulation Act, 2010 (FCRA) registration of two prominent non-governmental organisations (NGOs) — Centre for Policy Research (CPR) and World Vision India (WVI) have been cancelled this month. What is FCRA? Key provisions of FCRA, 2010 Key aspects Description

Voice clone-AI

Voice clone fraud has been on the rise in India. AI voice cloning – It is the process of creating a synthetic replica of a person’s voice through machine learning and speech synthesis technology.It is called as voice deepfakesor audio deepfakes. Objective – To achieve a high level of na

Science communication- how to promote

Steps taken by India to promote Science Communication Publications and Information Directorate (PID) - An organisation under Council of Science and Industrial Research (CSIR) established in 1951 for publishing and disseminating scientific information in India. National science magazines- The PI

Universal Basic Income (UBI)- Analysis

Universal Basic Income (UBI) can strengthen welfare architecture and unlock the nation’s latent demographic potential. UBI - It is an income support mechanism typically intended to reach all or a very large portion of the population regardless of their earnings or employment status. Objective- To provide enough to co

Toppers

Search By Date

Newsletter Subscription
SMS Alerts

Important Links