BOLSTERING INDIA'S GREEN INITIATIVES

Permitting FIIs to invest in India’s green projects broadens the capital base required to meet the country’s ambitious 2070 net-zero targets. This strategy aligns with India’s commitment to sourcing 50 per cent of its energy from non-fossil fuel sources and reducing the carbon intensity of its economy by 45 per cent, as pledged by Prime Minister Narendra Modi at COP26 in Glasgow in 2021.

- Shivanand Pandit

ON April 5, 2024, in a significant boost to India’s green initiatives, the Reserve Bank of India (RBI) approved investments in the country’s Sovereign Green Bonds (SGrBs) by Foreign Institutional Investors (FIIs) operating within the International Financial Services Centre (IFSC). This pivotal decision enhances India’s efforts towards sustainability and expands financing options for eco-friendly and environmentally sustainable projects across the country.

Permitting Flls to invest in India's green projects broadens the capital base required to meet the country's ambitious 2070 net-zero targets. This strategy aligns with India's commitment to sourcing 50 per cent of its energy from non-fossil fuel sources and reducing the carbon intensity of its economy by 45per cent, as pledged by Prime Minister Narendra Modi at COP26 in Glasgow in 2021.

Green bonds are financial products issued by various entities like companies, nations, and multilateral organizations, dedicated solely to funding projects with positive environmental or climate impacts. They offer investors fixed-income returns while supporting initiatives like renewable energy, sustainable transportation, and eco-friendly construction projects.

Between 2008 and 2020, the World Bank emerged as a significant player in green bond issuance, with a total of $14.4 billion dedicated to funding 111 projects worldwide. These initiatives primarily focused on renewable energy and efficiency (33per cent), clean transportation (27per cent), and agriculture and land use (15per cent). Additionally, by the conclusion of 2020, 24 national governments collectively issued Sovereign Green, Social, and Sustainability bonds amounting to $111 billion.