Reserve Bank of India (RBI) auctioned the country's first sovereign green bonds (SGrBs) worth Rs 8,000 crore on 25 January 2023. This is the first part of the Rs 16,000 crore sovereign green bond auction that the RBI will conduct this year, the second to be conducted on February 9th 2023.
Green bonds are a debt instrument where the bond issuer pledges to use the funds obtained from the bondholder for environmentally sustainable projects. The bond issuer reports the impact of their business to the bondholder. Investors can thus support businesses that follow responsible environmental practices, potentially earning returns on their investments.
The proceeds raised from SGrBs will finance various green projects, including renewable energy, clean transportation, energy efficiency, climate change adaptation, sustainable water and waste management, pollution prevention and control, and green buildings.
Green bonds are emerging as an essential financial instrument to combat climate change and other related issues. They offer investors a platform to engage in correct environmental practices as they influence the issuer's business strategy. They are a way to hedge investment against climate risks potentially achieving similar, if not better, returns.
To know more about environmental, social and governance visit our ESG page.
