TaxTMI 
TaxTMI 
TaxTMI 
Framework for Environment, Social and Governance (ESG) Debt Securities (other than green debt securities)
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....('SEBI NCS Regulations') defines ESG debt securities as under: "Environment, Social and Governance Debt Securities or "ESG Debt Securities" means green debt securities, social bonds, sustainability bonds, sustainability-linked bonds, or any other type of bonds, by whatever name called, that are issued in accordance with such international frameworks as adapted or adjusted to suit Indian requirements that are specified by the Board from time to time, and any other securities as specified by the Board." III. Further, in terms of Regulation 2(1)(q) of the SEBI NCS Regulations "Green debt security" means a debt security issued for raising funds subject to the conditions as may be specified by the Board from time to time, to be utilised for project(s) and/ or asset(s) falling under certain categories mentioned therein. IV. Regulation 12A of the SEBI NCS Regulations reads as under: "Issuance of Environment, Social and Governance Debt Securities 12A. An issuer desirous of issuing and listing of Environment, Social and Governance Debt Securities shall comply with such conditions as may be specified by the Board." V. In view of the above, in order to facilitate Issuers to raise fund....
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....ther considerations for a "just transition" (such provision and/or promotion could include SME financing and microfinance) e) Food security and sustainable food systems (e.g. physical, social, and economic access to safe, nutritious, and sufficient food that meets dietary needs and requirements; resilient agricultural practices; reduction of food loss and waste; and improved productivity of small-scale producers) f) Socioeconomic advancement and empowerment (e.g. equitable access to and control over assets, services, resources, and opportunities; equitable participation and integration into the market and society, including reduction of income inequality) g) any other category, as may be specified by the Board from time to time. 5. For purposes of SEBI NCS Regulations and SEBI LODR Regulations, 2015 and this Circular, Sustainability bonds shall have the definition as under: 'Sustainability bonds' means a debt security issued for raising funds, subject to the conditions as may be specified by the Board from time to time, to be utilised for finance or re-finance of a combination of eligible green project(s) and social project(s) as specified under the definition of....
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....r sustainability-linked bonds: An issuer desirous of issuing sustainability-linked bonds shall make the disclosures as specified in Part I of Annexure B in the offer document for public issues/ private placements in addition to adhering to the obligations in accordance with the relevant international standards that the securities are aligned/ issued with. An issuer who has listed sustainability-linked bonds shall provide disclosures as specified in Part II of Annexure-B along with its annual report and financial results. The issuer of sustainability-linked bonds shall appoint an independent third party reviewer/ certifier to undertake the activities and responsibilities specified in part III of Annexure-B. VI. Responsibilities of the issuer: An issuer of social bonds/ sustainability bonds shall: a) Maintain a decision-making process which it uses to determine the continuing eligibility of the project(s) and/or asset(s).; and b) Ensure that all project(s) and/or asset(s) funded by the proceeds of social bonds / sustainability bonds, meet the documented objectives of social bonds/ sustainability bonds and utilise the proceeds only for the stated purpose, as disclosed in th....
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....n-Convertible Securities) Regulations, 2021 to protect the interest of investors in securities and to promote the development of, and to regulate the securities market. XI. This Circular is available at www.sebi.gov.in under the link "Legal→Circulars". Yours faithfully, Rohit Dubey General Manager Department of Debt and Hybrid Securities +91-022 2644 9510 [email protected] Annexure-A I. Initial disclosure requirements for issue and listing of Social Bonds: An issuer desirous of issuing social bonds shall make the following additional disclosures in the offer document for public issues/ private placements: 1. Social objectives of the social project(s) including but not limited to details of the target population and the intended benefits of the proposed social projects to the identified target population; 2. Brief details of decision-making process followed/proposed for determining the eligibility of project(s) and/or asset(s), for which the proceeds are being raised through issuance of social bonds, such as: a) Details of process followed by the issuer for evaluating and selecting the project(s) and/or asset(s); b) Process followed/ t....
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....d/invested including a brief description of such project(s) and/or asset(s), amounts disbursed/ allocated and their expected impact. b) In cases where confidentiality agreements restrict the disclosure of details about specific project(s) and/or asset(s), the information shall be presented in generic terms or on an aggregated portfolio basis (e.g. percentage allocated to certain project categories). c) Qualitative performance indicators and, where feasible, quantitative performance measures of the social impact (as applicable) of the project(s) and/or asset(s). If the quantitative benefits/impact cannot be ascertained, then the said fact may be appropriately disclosed along with the reasons for non-ascertainment of the benefits/impact on the environment. d) Methods and the key underlying assumptions used in preparation of the performance indicators and metrics; e) Details of the deployment of the mitigation plan (as disclosed in the offer documents) for the perceived social risks. 4. Impact Reporting: Information, on a project-by-project basis, pertaining to reporting of the social impact of the projects financed by the social bonds. Reporting standards or taxonomies foll....
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....vate placements: 1. The issuer shall disclose the rationale for issuance of sustainability-linked bonds and consistency with issuers' overall sustainability and business strategy; 2. Details of taxonomies, standards or certifications both Indian and global, if any, referenced. 3. The issuer shall adhere to pre-issuance obligations in accordance with the relevant international standards that the securities are aligned with. 4. An indicative list of disclosures to be specified in offer document is given below for reference: a) Details of Issuer's core sustainability and business strategy; b) Details of Key Performance Indicators KPI(s) including the definition of KPI(s), associated calculation methodology and benchmark(s) referenced; c) The rationale and process according to which the KPI(s) have been selected and how the KPI(s) fit into issuer's sustainability strategy and addresses relevant environmental, social and/ or governance challenges; d) Details of Sustainability Performance Targets SPT(s) linked with the selected KPI(s) including the definition, calculation methodology and benchmark(s)7 referenced; 5. Details of the system/procedures to be employ....
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....luding baselines where relevant; and ii. A verification report by an independent third-party reviewer in relation to the SPT, outlining the performance against the SPTs and the related impact, and timing of such impact, on the bond's financial and/or structural characteristics. III. Independent third party reviewer/ certifier for sustainability-linked bonds: i. The issuer shall appoint an independent third party reviewer/ certifier to ascertain that the sustainability-linked bonds are in alignment with any of the recognized standards mentioned at paragraph V.3 and/ or paragraph V.6 above in compliance with the following conditions: a) The reviewer shall be independent of the issuer, its directors, senior management and key managerial personnel; b) The reviewer shall be remunerated in a way that prevents any conflicts of interest; and c) The reviewer shall have expertise in assessing ESG debt securities. ii. Issuers shall appoint an independent third party reviewer to assess and certify the following: a) the relevance, robustness and reliability of selected KPIs; b) the selected KPIs being materially linked to the core sustainability and business strategy of the Is....