The issuance of Sovereign Green Bonds would also lead to a greater flow of capital into green projects and entities undertaking such projects
Environmental, Social, Governance (ESG) is given importance in the Economic Survey 2022-23. Referring to private sector entities and their domestic borrowings through ESG bonds, the survey adds that the issuance of Sovereign Green Bonds (SGrBs), too, would help in creating an ecosystem, which fosters a greater flow of capital into green projects and entities undertaking such projects. “SGrBs would provide a pricing reference for private sector entities in India for their domestics borrowings through ESG Bonds”, the survey added.
The Reserve Bank of India (RBI) has notified the indicative calendar for the issuance of SGrBs for 2022-23. The issuance would take place through two auctions on January 25, 2023 and February 9, 2023, respectively, for Rs 8,000 crore each, totalling Rs 16,000 crore, adds the survey.
Elaborating about investing in resilience for sustainable development, the survey notes that SEBI has been one of the early adopters of sustainability reporting for listed entities and requires mandatory ESG-related disclosures for the top 100 listed entities (by market capitalisation) since 2012. Over the years, the requirement was strengthened to cover the top 500 and then the top 1000 entities.
SEBI has issued new sustainability reporting requirements under the Business Responsibility and Sustainability Report (BRSR), which are more granular with quantifiable metrics in line with the principles ensconced in the ‘National Guidelines on Responsible Business Conduct’. The BRSR was made mandatory for the top 1000 listed entities (by market capitalisation) from 2022–23. Early research show that for top Indian firms, ESG performance reduced stock return volatility during Covid-1913 and enabled firms to access capital at lower cost by building investors’ confidence as ESG disclosures create long-term value for investors as well as reduce information asymmetry, adds the survey.
Saying that finance is a critical input in India’s climate actions, the survey points out that the country’s climate actions have so far been largely financed from domestic sources, including government budgetary support, a mix of market mechanisms, fiscal instruments, and policy interventions. While several estimates of the required investments are indicated in the LT- LEDS report prepared by India, it is important to note that all allude to a need for tens of trillions of US dollars, adds the report.