The complete framework for sovereign green bonds, which will be used to finance environmentally friendly projects, was approved by Finance Minister Nirmala Sitharaman on Wednesday.
Green bonds are financial products that raise money for initiatives that are climate- and environmentally friendly. Additionally, compared to conventional bonds, green bonds have a substantially lower cost of financing.
The Ministry of Finance stated that today’s clearance will increase India’s commitment to its Nationally Determined Contribution (NDC) targets, which were agreed upon under the Paris Agreement, and assist in luring foreign and domestic investment into qualified green projects.
The money raised from the sale of these bonds will be used to fund government initiatives that lower the economy’s carbon intensity.
The framework closely resembles the commitments made by India under “Panchamrit,” which were explained by Prime Minister Narendra Modi during COP26 in Glasgow in November 2021.
The clearance satisfies the Union Finance Minister’s declaration that Sovereign Green Bonds would be issued to raise money for environmentally friendly initiatives in the Union Budget for FY 2022–2023.
CICERO, a reputable, independent organisation, was chosen to assess India’s green bond framework and vouch for its compliance with the ICMA’s Green Bond Principles and worldwide best practices.
According to the government, the organisation has evaluated India’s Green Bonds Framework as “Medium Green” with a “Good” governance score after careful deliberation and consideration.
At the COP26 Summit in Glasgow in November of last year, Prime Minister Modi introduced Panchamrit, a framework of five components, to address the challenge of addressing climate change.
“First- India will reach its non-fossil energy capacity to 500 GW by 2030. Second – India will meet 50 per cent of its energy requirements from renewable energy by 2030. Third- India will reduce the total projected carbon emissions by one billion tonnes from now onwards till 2030. Fourth- By 2030, India will reduce the carbon intensity of its economy by less than 45%. And fifth- by the year 2070, India will achieve the target of Net Zero,” he addressed.