GREEN BONDS
CONTEXT :
- The Reserve Bank of India (RBI) announced that it will for the first-time, issue Sovereign Green Bonds (SgrBs) worth Rs 16,000 crore, in two tranches of Rs 8,000 crore each in the current financial year.
GREEN BONDS :
- Green bonds are bonds issued by any sovereign entity, inter-governmental groups or alliances and corporates.
- The proceeds of the bonds are utilised for projects classified as environmentally sustainable.
- The framework for the sovereign green bond was issued by the government on November 9, 2022.
A project is classified “green” on the basis of four key principles which include:
- Encouraging energy efficiency in resource utilisation
- Reducing carbon emissions and greenhouse gases
- Promoting climate resilience
- Improving natural ecosystems and biodiversity
IMPORTANCE OF GREEN BONDS :
- Green Bonds have emerged as an important financial instrument to deal with the threats of climate change and related challenges.
- According to the International Finance Corporation (IFC), a World Bank Group’s institution, climate change threatens communities and economies, and it poses risks for agriculture, food, and water supplies.
- A lot of financing is needed to address these challenges.
- It’s critical to connect environmental projects with capital markets and investors and channel capital towards sustainable development and Green Bonds are a way to make that connection.
SOURCE : INDIAN EXPRESS
SYLLABUS : PRELIMS, INDIAN ECONOMY
