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Reshaping India debt landscape: $30 billion in sustainable finance through green bonds

In a seismic debt shift, green bonds have surged to prominence, emerging as the cornerstone of the staggering $3.7 trillion global thematic debt, encompassing ESG (environmental, social, and governance) bonds, social bonds, sustainability bonds, and green bonds. Neha Kumar, Head of the South Asia Program at the Climate Bonds Initiative, delivered a monumental announcement at the Moneycontrol Policy Next Summit on 25 August. India's march towards sustainable financing reached an unprecedented zenith, with cumulative theme debt issuance made up of a majority of green bonds soaring to a remarkable $30 billion since 2015, marking a watershed moment as of March 2023.

Reshaping India debt landscape_portrait of a Red Panda in a forest in India_visual 1Portrait of a Red Panda in a forest, India.

This transformative stride comes amid a swiftly expanding worldwide green bond market, valued at a towering $2.7 trillion. Kumar underlined that within the broader spectrum of the $3.7 trillion thematic debt, green bonds reign supreme. These bonds have become a pivotal instrument for the future, with their increasing presence reshaping the financial landscape.

Read more: Net zero: benefits, challenges, strategies, and the power of nature-based solutions

Speaking at a panel discussion titled ‘Building Cities of Tomorrow: Sustainable Renewal and Climate Financing’, Kumar addressed a fundamental hurdle facing Indian cities. Due to their lack of fiscal autonomy and reliance on state grants, they grapple to raise capital. While municipal bond and green bond issuances gain momentum, transparency in fund allocation is imperative.

Kumar also illuminated the evolving narrative of thematic debt in India. While green bonds hold the majority share, recent years have witnessed the emergence of social bonds, ESG bonds, and sustainability-related bonds. Despite these promising developments, municipal issuances still represent a mere 0.012% of India's expansive corporate debt market.

Read more: Singapore's biodiversity calculator: bridging urbanisation and ecology

Arjun Dutt, Senior Program Lead at the Council on Energy, Environment and Water (CEEW), accentuated the importance of project viability in attracting private investment, making a resounding case for sound infrastructure projects. Enhancing project viability, Dutt noted, involves leveraging carbon credits to create revenue streams that resonate with investors.

The discussion also featured Chandra Bhusan, CEO of the environmental research organisation iForest, who highlighted the challenges posed by rapid peri-urban population growth. With a significant portion of India already urbanised, fundamental issues of urban planning and development are pivotal. These intricacies, coupled with financial considerations, shape the trajectory of India's urban transformation.

Madhav Raman, Principal and Co-founder of Anagram Architects, emphasised the nuanced dynamics of de-ruralisation and swift urbanisation, urging comprehensive examination by municipal entities issuing green bonds. As present-day villages evolve into small cities, achieving stability amidst urbanisation and addressing infrastructure challenges are paramount. Raman's call for a well-rounded urban approach echoed throughout the discussion, emphasising the holistic factors shaping future cities.

In a world where the preservation of nature is more critical than ever, the significance of green bonds emerges as a sustainable solution. Green bonds, with their transformative impact on sustainable initiatives, stand as a testament to the synergy between finance and nature conservation. In the midst of biodiversity and carbon concerns, DGB Group is an unwavering ally to businesses. Our dedication to crafting and implementing cutting-edge nature-based solutions not only aids businesses in achieving net zero status but also fosters a biodiverse and sustainable future for generations to come.

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