NAME: SIMIYU BRIAN

REG NO: PS34/70056/16

GREEN BONDS
A concept developed with investors for investors aiming to establish a transparent and prudent way for
mainstream financial mandates to participate in climate financing.

As the underwriter of the first world bank green bonds in 2008 and the market leader, SEB is committed
to continue in this dedicated work in close corporation with investors and issuers to obtain :

 Transparency
Open communication

 Traceability
Earmarking Of proceeds

 Governance
Good governance and high standards of projects

 Vetting Of Green
Verification of the green framework

 Simplicity

THE SCOPE OF GREEN BONDS

1. Renewable Energy
India’s renewable energy sector requires significant financing, which presents one of the “Climate
Resilience Principles” to address the risk profile and promote a climate-resilient economy. Both new and
existing investment in built and natural environments must follow 27 these principles, quoted below:

 They recognize that infrastructure design and construction today must

incorporate the climactic conditions of tomorrow, the expected volatility and
extremes already ‘baked in’ to our global systems.
  They require that measures are taken in asset or project design, in construction
or retrofits, that ensure the asset or project is ‘fit for climate purpose’ over its
operating life.
 They recognise that the definition of ‘fit for purpose’ must now automatically
include climate resilience and adaptation measures, or that the project itself
must increase the climate resilience of broader systems and networks within the
built environment or natural ecosystems.

2. Disaster Management
Disaster management is another significant area where green bond investments can be utilized,
especially by coastal states that are becoming increasingly more vulnerable to tropical storms and
cyclones. In the aftermath of cyclone Fani, for instance, it is estimated that the state of Odisha will need
some US$14 billion 28 to rebuild its infrastructure. Climate change, which results in the warming of the
oceans, has further intensified such extreme weather 29 events. Therefore, the rebuilding strategy must
include the creation of more storm-resilient infrastructures to handle similar future events. According to
the SEBI guidelines for green bonds, such investments come under the category of “climate change
adaptation.”

3. Agriculture
Primary sectors such as agriculture play a crucial role in developing the Indian economy and 30creating
in-situ employment. However, the contribution of the agriculture sector in the Indian economy has
steadily decreased at a rate of 14.4 percent in gross value added since 2015–16. Under the SEBI
guidelines, organic farming, zero-budget natural farming and sustainable irrigation practices come under
sustainable land use and sustainable water management. Some capital-intens ive technologies, such as
drip irrigation and farm-level anaerobic digestion of manure and crop waste, can be linked with green
bonds to fast 31 track fund-raising. The CBI is now collaborating with the World Resource Institute (WRI)
to explore the possibility of issuing adaptation and resilience bonds for the agriculture sector in 32 India.
Green practices can bring in new investment and become the engine of growth in the agriculture sector,
which can help India become a US$5-trillion economy by 2024.

4.Coastal Preservation
The rise in sea levels is a significant threat to coastal cities and ecologically sensitive areas of India.
According to the GoI, the sea level has risen 1.3 mm/per year along the Indian coasts in 39 the last 40 to
50 years. With rising sea levels, the frequency of floods will increase significantly along with the cost to
the economy. The 2005 flood, for instance, cost Mumbai US$1.7 billion in damages in a single day. There
are two ways of preventing seawater inundation, and both require substantial financing. The cities can
either build hard infrastructure, such as sea walls and levees, or 40 aim for beach nourishment. For
example, the US has utilised over US$787 million from 1995 41 to 2002 for beach nourishment. Long-
term green bonds will provide one of the solutions in terms of raising capital to implement such projects
in high-risk areas.
 EXAMPLES OF GREEN BONDS
1. USA: Tesla Motors Inc. issued $600 million convertible bonds in May 2013.

2. NIGERIA: The nation has started the process of issuing a $ 64 million green bond which

is aimed at local investors. The proceeds would be used to finance low emission projects

such as solar power, deforestation, transport, etc.

3. INDIA:

o Export-Import Bank (EXIM) issued 5-year $500 million green bonds. The

proceeds of these funds are to be used for funding Green projects in countries in

the Indian Subcontinent (other than India) like Bangladesh and Sri Lanka. This

bond had received a rating of BBB- by Standard & Poors and Baa3 by Moody’s.

o Yes Bank: Issued green bond of $54 million that was completely bought by

the International Finance Corporation (IFC).

4. London Stock Exchange (LSE): LSE, in order to provide investors with clearer access

to green projects via green bonds, has launched a range of green bonds segments.

REFFERENCES

1. Climate Bond Initiative, Green Bonds: The state of the market, 2018
2. Irene Queen, “Green Bonds & Climate Change”, Colorado Mesa University,

August, 2006.

3. . Climate Bond Initiative, “Climate Bonds releases new Climate Resilience

Principles Framework for accelerating climate resilient investments in green bond

market”, September 2019