With ESG being one of the core agendas of the government in the upcoming Budget 2023, finance minister Nirmala Sitharaman is likely to announce some of the key environmentally sustainable and climate-suitable projects for which funds will be raised through green bonds.

A source close to the development told Fortune India that the government kickstarted the process of identifying the projects for which funds will be garnered through green bonds ever since the approval of the green bond framework. “A detailed list of projects and the amount to be raised through green bonds may be announced in the budget,” the official said.

The areas could be renewable energy, energy efficiency, clean transportation, climate change adaptation, sustainable water and waste management, pollution prevention and control, green buildings, sustainable management of living natural resources and land use and terrestrial and aquatic biodiversity conservation.

The Centre earlier indicated that a tranche of green bonds will be brought in Q4 FY23 as a part of the overall borrowing. The budget, however, is expected to lay down the plan for the next year as well as the government’s green economy vision for the coming years.

The government in November last year approved the country’s final framework for sovereign green bonds, setting the obligations of the government as a green bond issuer. The approval of the framework will facilitate attracting global and domestic investments in green projects in the country.

The framework will apply to all the sovereign green bonds issued by the government. One of the key tenets of the framework is that investors in the bonds will not bear any project risk and will get results irrespective of the performance of the project.

“Green bonds are financial instruments that generate proceeds for investment in environmentally sustainable and climate-suitable projects. By virtue of their indication towards environmental sustainability, green bonds command a relatively lower cost of capital vis-à-vis regular bonds and necessitate credibility and commitments associated with the process of raising bonds,” the finance ministry had said in a release.

The proceeds generated from the issuance of such bonds will be deployed in public sector projects, which help in reducing the carbon intensity of the economy, it added.

Outlining the key tenets of the green bond issuance, the framework said, “Payments of principal and interest on the issuances under this framework are not conditional on the performance of the eligible projects. Investors in bonds issued under this framework do not bear any project-related risks.”

Sovereign green bond proceeds can be used to finance and/or refinance expenditure in parts or whole for eligible green projects falling under eligible categories, the framework pointed out.

The ministry earlier pointed out the approval of the framework will further strengthen India’s commitment towards its Nationally Determined Contribution (NDCs) targets, adopted under the Paris Agreement, and help in attracting global and domestic investments in eligible green projects.

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