While presenting the Union Budget 2022 the Finance Minister Nirmala Sitharaman has announced the idea of raising money by issuing green bonds. The proceeds of the sovereign green bonds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.
ESG –environmental, social and governance focused portfolios of global investors may want to take a look at this offering. "The green bond market is globally expanding at a fast pace and this will help India access long term funds at a competitive rate. This will also improve the ESG climate in the country." says Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.
Though the details of these bonds will be announced in the due course, it can be an important instrument to channelise savings of investors who are keen to support environmentally responsible projects. Even Individual investors keen to invest in these bonds can do so if the bonds are made available for public at large through RBI Retail Direct.
As of now ESG centric investment strategies are prominently practised by mutual funds in India. These schemes invest in shares of companies that score high on ESG parameters. Nine ESG thematic funds manage assets under management worth Rs 12,401 crore. Over last five years these schemes have given 15.56 percent returns on an average, according to Value Research.