Green Bonds
Context:
- Recently, 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.
Importance of the Green Bonds:
- Green Bonds have become a crucial financial tool to address the concerns of climate change and associated difficulties during the past few years.
- According to the International Finance Corporation (IFC), a part of the World Bank Group, climate change creates concerns for agricultural, food, and water resources as well as communities and economies.
- To overcome these issues, substantial funding is required. In order to direct funds towards sustainable development, it is essential to link environmental projects with capital markets and investors.
- Green Bonds are one way to do this.
What are the advantages?
- Green Bonds give investors a forum to practice ethical behaviour, influencing the bond issuers’ business strategies.
- They offer a way to protect against the dangers associated with climate change while generating returns on investment that are at least comparable to, if not superior.
- According to the IFC, this is how the expansion of green finance and green bonds indirectly disincentivizes projects with large carbon emissions.
Government’s Stand:
- The Government stated in August of last year that it is committed to reducing the emissions intensity by 45% from 2005 levels by 2030 and achieving a cumulative installed capacity of electric power from non-fossil fuel sources of around 50% by the same year.
- The Union Budget 2022–23 announced plans to issue Sovereign Green Bonds as part of its pledge to considerably lower the economy’s carbon intensity.
Source The Hindu
For more updates, Click Here