India Develops as 2nd Largest Market for Green Bonds with Transactions worth $10.3 Billion

India has become the second-largest market globally for green bonds with $10.3 billion worth of transactions in the first half of 2019, as issuers and investors sustained to embrace policies and strategies linked to sustainable development goals, as per Economic Survey 2019-20.

Green bonds are debt securities delivered by financial, non-financial or public entities where the profits are used to finance 100 per cent green projects and assets. India now has the second-largest emerging green bond market after China.

As per the Survey, Social Bonds also upheld visibility with US$ 5.5 billion of issuance within the labelled market. Climate bonds continued focused on green bonds, which are precisely linked to climate-change mitigation, adaptation and resilience.

A number of government agencies have contributed to this issuance including Indian Renewable Energy Development Agency (IREDA) and Indian Railway Finance Corporation (IRFC). In 2018, State Bank of India entered the green market with a $650 million certified climate bond.

In order to scale up the environmentally sustainable investments, India joined the International Platform on Sustainable Finance (IPSF) in October 2019. IPSF acknowledges the global nature of financial markets which can help finance the transition to a green, low carbon and climate resilient economy by linking financing needs to the global sources of funding.

The main purposes of this platform are exchange and dissemination of information to promote best practices in environmentally sustainable finance, comparing different initiatives and identify barriers and opportunities to help scale up environmentally sustainable finance.

Under the United Nations Framework Convention on Climate Change and also Paris Agreement, the intent and obligation of climate finance highlights that developed countries will provide financial resources to developing countries to undertake adaptation and mitigation actions.

In 2009, developed countries committed to a goal of jointly mobilizing $100 billion a year by 2020 to address the needs of developing countries and decided that a significant portion of such funding should flow through the Green Climate Fund (GCF).

Though, the total pledges to the GCF in the Initial Resource Mobilization (IRM) in 2014, the largest dedicated climate funds are a meagre $10.3 billion, way behind the target. Approximately $10.2 billion of the pledges had been converted into contribution agreements and arrangements.

The GCF Board has approved $5.2 billion to support the implementation of 111 climate change adaptation and mitigation projects and programmes in 99 developing countries.

Business | News published on 03/02/2020 by Moulin

 
 
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