Framework for Environment, Social and Governance (ESG) Debt Securities (other than green debt securities)
Summary
This circular establishes the operational framework for issuing and listing ESG debt securities, specifically social bonds, sustainability bonds, and sustainability-linked bonds. It defines these instruments based on their use of proceeds or sustainability performance targets and aligns them with international standards such as ICMA Principles. The document mandates specific disclosure requirements and the appointment of independent third-party reviewers for social bond issuers. The document outlines disclosure and operational obligations for issuers of social, sustainability, and sustainability-linked bonds. It mandates the appointment of independent third-party reviewers and requires specific measures to mitigate purpose-washing risks. The circular establishes compliance timelines starting June 5, 2025, and provides detailed initial disclosure requirements for social bonds in Annexure-A. This section outlines the continuous disclosure requirements for issuers of social bonds, mandating updates on fund utilization and unutilized proceeds alongside annual reports. It further details the appointment and eligibility criteria for independent third-party reviewers or certifiers to ensu
Text
SEBI approved frameworks for issuance of social bonds, sustainability bonds and sustainability-linked bonds, termed Environment, Social and Governance (ESG) Debt Securities.
ESG Debt Securities means green debt securities, social bonds, sustainability bonds, sustainability-linked bonds, or any other type of bonds issued in accordance with specified international frameworks adapted to Indian requirements.
Green debt security means a debt security issued for raising funds to be utilised for project(s) and/or asset(s) falling under certain categories specified by the Board.
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.
This circular is applicable to Environmental, Social and Governance (ESG) debt securities labelled as ‘social bonds’, ‘sustainability bonds’ and ‘sustainability-linked bonds’ which are listed or proposed to be listed on a recognized stock exchange.
The requirements under this chapter shall be in addition to the requirements specified in SEBI NCS Regulations and SEBI LODR Regulations.
Debt securities shall be labelled as ‘social bonds’ or ‘sustainability bonds’ or ‘sustainability-linked bonds’ only if funds raised are utilised for projects aligned with recognized standards like ICMA Principles, Climate Bonds Standard, ASEAN Standards, European Union Standards, or Indian financial sector regulator frameworks.
Social Bonds means a debt security issued for raising funds to be utilised for social project(s) that directly aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes.
Sustainability bonds means a debt security issued for raising funds to be utilised for finance or re-finance of a combination of eligible green project(s) and social project(s).
Sustainability-linked bonds means a debt security which has its financial and/or structural characteristics linked to predefined sustainability objectives measured through KPIs and assessed against SPTs.
The classification of a debt security as a green debt security, social bond or sustainability bond should be determined by the issuer based on its primary objectives for the underlying projects.
An issuer desirous of issuing social bonds shall make the disclosures specified in part I of Annexure-A in the offer document for public issues/ private placements and appoint an independent third-party reviewer/certifier.
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Source: SecMarx — Framework for Environment, Social and Governance (ESG) Debt Securities (other than green debt securities). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.