Only bonds funding projects that align with recognized ESG definitions and standards can be labeled as social, sustainability, or sustainability-linked bonds. This ensures that the ESG label is credible and backed by verifiable impact.
Social bonds under the framework must finance projects that deliver measurable social benefits in areas including:
Affordable basic infrastructure
Access to essential services (healthcare, education, clean water)
Employment generation and unemployment alleviation
Food security
Socioeconomic advancement and empowerment
SLBs are performance-based instruments where the financial terms are linked to the issuer’s achievement of pre-defined sustainability targets. The framework mandates issuers to disclose:
Their sustainability and business strategy
Defined Key Performance Indicators (KPIs)
Sustainability Performance Targets (SPTs) and the rationale behind them
Third-party reviewers must certify the relevance, robustness, and ambition of KPIs and SPTs, ensuring these targets are material to the issuer’s ESG strategy and address significant ESG challenges.
A critical aspect of the framework is the mandatory appointment of independent third-party reviewers. These reviewers are tasked with:
Verifying alignment with recognized ESG standards
Assessing internal tracking and impact reporting systems
Certifying the credibility of KPIs and SPTs for SLBs
This requirement is designed to prevent misuse of ESG labels and to build trust among investors by ensuring transparency and accountability.
Issuers must provide comprehensive disclosures before issuance, detailing project objectives, fund allocation, and monitoring processes. Post-issuance, annual reports must include updates on the utilization of proceeds, impact assessments, and progress against KPIs and SPTs for SLBs. Companies listed on SME platforms have additional bi-annual disclosure obligations.
Tap into ESG-Driven Capital: With global investors prioritizing sustainable finance, this framework opens doors to a growing pool of ESG-focused capital.
Boost Brand Credibility: Adhering to SEBI’s guidelines demonstrates strong governance and authentic ESG commitment—enhancing issuer reputation
Access Flexible Capital: Sustainability-linked bonds (SLBs) offer versatile financing tied to ESG performance, without restricting proceeds to specific projects.
Compete Globally: The framework aligns with international standards, enabling issuers to meet global investor expectations without regulatory disadvantages.
