SEBI Framework for Social, Sustainability and SL Bonds
Why in the news
SEBI laid down detailed rules for ESG-labelled debt to stop purpose-washing and bring India in line with global norms.
Key facts
- Date: 5 June 2025, applicable to all fresh issuances.
- Covers Social Bonds, Sustainability Bonds and Sustainability-Linked Bonds (SLBs); green bonds are excluded.
- Aim: transparency, credibility, accountability and curbing purpose-washing.
Instruments
| Instrument | Nature |
|---|---|
| Social Bonds | Fund social projects such as healthcare, education, food security |
| Sustainability Bonds | Mix of environmental and social goals |
| SLBs | Tied to performance-based ESG targets |
Disclosure and review rules
- Offer document: ESG objectives, project categories, eligibility criteria, use of proceeds, evaluation process.
- After issue: annual reports on fund use and ESG impact; for SLBs, progress on sustainability KPIs.
- Third-party review is mandatory, aligned with ICMA Principles, EU Green Bond Standards, ASEAN standards or Climate Bonds Initiative.
- Penalty: SLBs missing targets may carry higher coupons or other charges.
Significance
- Standardises ESG bond governance, builds investor confidence and supports climate finance goals.
Exam angle
- Regulator: SEBI; term: purpose-washing; reviewer: external certifier.