Green bonds are specialized financial instruments designed to fund projects with environmental benefits. These bonds are issued by various entities including governments, municipalities, and corporations. The funds raised through green bonds are allocated exclusively for environmentally sustainable projects such as renewable energy development, enhancements in energy efficiency, sustainable agriculture, and waste management.
In the fiscal year 2022-2023, the Government of India made a significant move by issuing sovereign green bonds valued at approximately USD 2 billion. These bonds are set to mature in two phases, some in 2028 and others in 2033. The distinct advantage of green bonds is their relatively lower interest rates, as they are aimed at supporting social causes.
GSS Plus bonds, also known as Green, Social, and Sustainability bonds, integrate environmental, social, and governance objectives. They share similarities with ESG bonds. In 2021, Indian companies successfully raised nearly USD 7 billion through ESG and green bonds, and these are listed on foreign stock exchanges.
Blue bonds are financial instruments that generate funds to support projects focused on marine ecosystem protection, sustainable fisheries, addressing climate change impacts on oceans, and enhancing coastal resilience. These bonds are pivotal in promoting the conservation and sustainable use of marine resources, benefiting coastal communities.
As of now, India has not issued any blue bonds. However, a comprehensive report by Niti Aayog on the potential of blue bonds has been submitted to SEBI in 2023.
The blue economy currently accounts for 4.1 percent of India’s economic framework. Given India's extensive 7,500-kilometer coastline and 14,500 kilometers of navigable inland waterways, there is significant potential for the deployment of blue bonds. These bonds could drive growth in various sectors including oceanic resource mining, sustainable fishing, national offshore wind energy policy, and the development of the blue flag beach eco-tourism model.
The Blue Flag certification, awarded by the Foundation for Environmental Education (FEE), signifies that a beach adheres to the highest environmental and safety standards. It ensures tourists have access to clean and hygienic bathing water facilities, enhancing the eco-tourism appeal of a beach.
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