NEW DELHI: Capital markets regulator Sebi has listed the basic dos and don'ts relating to green debt securities to address 'greenwashing' related risks.
The generally accepted definition of 'greenwashing' is, 'making false, misleading, unsubstantiated, or otherwise incomplete claims about sustainability of a product, service, or business operation'.
To address the concerns of market participants regarding greenwashing, Sebi said that an issuer of green debt securities will have to ensure that it will not use misleading labels, hide trade-offs or cherry pick data from research to highlight green practices and will maintain highest standards associated with issue of green debt security while adhering to the rating assigned to it.
While raising funds for transition towards a greener pathway, the issuer of green bonds will continuously monitor to check whether the path undertaken towards more sustainable form of operations is resulting in reduction of the adverse environmental impact and contributing towards sustainable economy, as envisaged in the offer document to avoid greenwashing risks, the regulator said in a circular.
The issuer will not utilize funds raised through green bonds for purposes that would not fall under the definition of 'green debt security' under the rules.
In case any such instances come to light regarding the already issued green debt securities, the issuer will disclose the same to the investors and, if required, by majority of debenture holders,...

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