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JC - Legal Updates - Consultation Paper on Green and Blue Bonds

Legal Updates

08 Aug 2022

Consultation Paper on Green and Blue Bonds

A consultation paper to enhance the existing framework for green bonds and introduce a framework for blue bonds as a mode of sustainable finance has been released. Following are the key proposals:


(a)  In addition to the existing criteria for the issuance of the green bonds, it has been proposed to consider funds raised for (i) pollution prevention and control, and (ii) for circular economy adapted products to fall under the category of green debt securities.

(b)  Proposition has been made to enhance the disclosure norms with respect to (i) end use in case the utilisation of proceeds shall be different at the bond level and the issuer undertakes large issuances having multiple end use at the portfolio level, (ii) identification and management of the perceived social risks, (iii) taxonomy, standards, certifications etc. referred for the project selection by the issuer, and (iv) details of project in case where the proceeds shall be used for refinancing.

(c)  Suggestion is made for specifying the role of the independent third party reviewer / certifier in more detail where such certifier / reviewer may be appointed at the option of the issuer for reviewing (i) alignment of funds with the objectives, (ii) the management and usage of proceeds of green bonds post-issue and (iii) internal tracking and allocation of funds.


SEBI has recognized the concept of blue bonds emerging in the global market. Keeping in mind the long coastline of India and the boom in the economy that can emerge by the development of marine related issues such as oceanic resource mining, coral degradation, sustainable fishing etc. SEBI has proposed to provide for a framework for raising capital via blue bonds.


Greenwashing refers to an activity whether capital is raised via issue of green bonds. However, it has been observed that the proceeds are channelized towards activities or projects that have negligible or negative environmental benefits even though when the money is raised by the issue of green bonds. In such situation, it is necessary to have a framework that ensures compliance with relevant norms to avoid misuse of the benefits that may be offered while raising sustainable finance through such newly developed routes. It is required that preventive measures are put in place to avoid greenwashing.

SEBI invites comments to address the above proposed issues released vide a consultation paper titled “Consultation Paper on Green and Blue bonds as a mode of Sustainable Finance” with respect to the above. Comments are invited till 31st August 2022.


For any further information, please contact Ms. Apurva Kanvinde (apurva.kanvinde@jclex.com) or Mr. Smit Parekh (smit.parekh@jclex.com).