SEBI’s Blue Bonds

In news- The Securities and Exchange Board of India (SEBI) has recently proposed the concept of blue bonds as a mode of sustainable finance.

About Blue bonds proposal-

According to SEBI, these securities can be utilised for various blue economy-related activities, including oceanic resource mining and sustainable fishing.
The proposals are aimed at aligning with the updated Green Bond Principles (GBP) published by the International Capital Market Association (ICMA).
Since the framework of green debt securities was laid down by the SEBI, there have been multiple events in the sustainable finance space around the world, thereby necessitating a review in the Indian context.
It has said that India has tremendous scope for deployment of blue bonds in various aspects of the blue economy like oceanic resource mining, sustainable fishing, national offshore wind energy policy and in the area of blue flag beach eco-tourism model that provide the tourists clean and hygienic bathing water facilities.
Further, the regulator has suggested adding two categories — pollution prevention and control and circular economy adapted products — as eligible green projects.

What are Green Debt Securities (GDS)?

SEBI framework defines Green Debt Securities (GDS) as debt securities issued for raising funds that are to be utilised for projects or assets falling under certain categories.
Most of the green bonds issued by Indian issuers are listed on offshore exchanges as issuers are finding it more attractive to list on bourses falling outside Sebi’s framework.
The regulator noted that one of the main hurdles for further growth has been a consistent and robust approach to identifying what is considered ‘green’.
It further said that a lack of clarity in this regard leads to greenwashing which is defined as the practice of channelling proceeds from green bonds towards projects or activities having negligible or negative environmental benefits.

What is the Blue economy?

According to the World Bank, the blue economy is the “sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of the ocean ecosystem”.
‘Blue economy’ aims at optimal utilisation of all sectors of the maritime domain, from living and non-living resources, tourism, ocean energy towards the sustainable development of coastal areas.
India has a 7,500 kilometre-long coastline and 14,500 kilometres of navigable inland waterways, and the development of the blue economy can serve as a growth catalyst.