SEBI enhances disclosures norms for issue and listing of green debt securities

Circular No. SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/023, Dated 06.02.2023

With a view to align the extant framework for green debt securities (GDS) with the updated Green Bond Principles (GBP), SEBI has amended Chapter IX of the Non-Convertible Securities (NCS) Operational circular. As per the amended norms, an issuer desirous of issuing GDS is required to make additional disclosures in the offer document for public issues/private placements.

The disclosures such as a statement on environmental sustainability objectives of green debt securities, details of the system/procedures, details of an indicative estimate of the distribution of proceeds raised through the issuance of green debt security between financing and refinancing of projects, details of the intended types of temporary placement of the unallocated and unutilised net proceeds from the issue of green debt securities etc.

Further, additional continuous disclosures are also to be made. In the annual report, details of the deployment of the mitigation plan for the perceived social and environmental risks are to be mentioned. Also, information pertaining to reporting of the environmental impact of the projects financed by green debt securities is to disclose.

Also, an issuer is now mandatorily required to appoint an independent third-party reviewer/certifier for green debt security for reviewing/certifying the processes. The said requirement of appointing a third-party reviewer/ certifier is applicable on a ‘comply or explain’ basis for a period of two years. The circular shall come into force for all issues of green debt securities launched on or after April 1, 2023.

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