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Operational guidelines on green bonds released by SEBI

Published on February 07, 2023

Current context: "Blue" and "Yellow" bonds have been introduced as new forms of sustainable finance by the Securities and Exchange Board of India (SEBI), India's capital market regulator, strengthening the framework for green bonds.

Operational guidelines on green bonds released by SEBI
  • The Securities and Exchange Board of India (SEBI) has taken a significant step in protecting consumers from greenwashing by releasing operational guidelines for green bonds.
  • These bonds are a subset of Green Debt Securities (GDS), with "Yellow Bonds" related to solar energy and "Blue Bonds" related to water management and the maritime industry.
  • The guidelines include dos and don'ts related to green debt securities, such as the prohibition of misleading labels or hiding tradeoffs and the requirement for the issuer to only use funds raised from green bonds for environmental purposes.
  • SEBI will also monitor the activities of the green debt security issuing company to ensure they are transitioning towards a greener path and contributing to a sustainable economy.
  • However, SEBI faces challenges in implementing these guidelines as most green bond issuers are listed on offshore exchanges, and there is no clear definition of what constitutes a "green" product or action.

Question: 

Q.1 What is the purpose of the operational guidelines released by the Securities and Exchange Board of India regarding green bonds?
a. To promote the use of fraudulent, misleading, and false claims about environmental friendliness
b. To protect consumers from Greenwashing
c. To encourage the use of misleading labels and hidden tradeoffs
d. To promote random data collection for research practices
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