SPOs Introduced to Boost Credibility in ESG Debt Market

Second Party Opinions (SPOs) have emerged as a key instrument to ensure that environment, social and governance (ESG)-labeled bonds and loans meet global standards and remain credible in the eyes of investors.

- TBG NETWORK

According to a report by ICRA ESG Ratings Limited, SPOs are designed to provide an independent assessment of an issuer's ESG debt framework, strengthening transparency, curbing risks of greenwashing, and building confidence in sustainable finance.

The development comes on the heels of a Securities and Exchange Board of India (SEBI) circular issued in June 2025, which requires issuers of ESG debt securities, including social bonds, sustainability bonds, and sustainability-linked bonds, to appoint independent third-party reviewers or certifiers.

These reviewers are tasked with verifying compliance with recognized standards, evaluating project selection processes, and validating the use of proceeds and impact reporting.