Sustainability Linked Bonds In India - An Analysis Of SEBI ESG Framework
- IJLLR Journal
- Jul 28
- 2 min read
Sanskriti Chaudhuri, Amity Law School, Amity University Kolkata
INTRODUCTION:
Sustainable Finance is a progressive approach where the financial system and investments are aligned with sustainable development goals and its foundation lies on concepts like ESG integration, impact investing, green financing and social responsibility. ESG integration refers to the inclusion of environment, social governance factors in decisions of investment. Impact investing refers to those investment strategies which results in the creation of significant and beneficial social and environmental impact including financial return. Green financing are those services of financial nature provided for projects which have significant environmental benefits like pollution prevention initiatives. An example of such financial tool is Green bonds. Social responsibility refers to the impact on society at a large due to financial activities and investments.1 Within this framework of Sustainable finance, ESG debt securities plays a crucial role and includes several types of bonds like green debt securities, social bonds, sustainability bonds, sustainability linked bonds and other types of securities specified by the Board which are issued in accordance with international frameworks suited to Indian requirements and which is specified by the Board from time to time. SEBI, as the primary regulatory of the securities market in India through its circular dated 5th June, 2025 introduced a new framework for Environment, Social and Governance (ESG) Debt Securities thus bringing in new changes pertaining to the Sustainability linked bonds.
SUSTAINABILITY LINKED BONDS: MEANING AND FEATURES
Sustainability-linked bonds (SLB) is a debt security which the issuer promises to repay, whose financial or structural terms change which is dependent on the issuer meets such objectives which are measured through Sustainability Key Performance Indicators (KPIs) and assessed against Sustainability Performance Targets (SPTs) which are predefined.3 In simple terms, Sustainability Linked Bonds are generally issued for general corporate purposes and by linking outcomes to financial incentives rather than funding specific projects, Sustainability Linked Bonds offer issuers greater flexibility and encourage broader sustainability performance improvements across the business.
