PTI New Delhi

Markets regulator Sebi on Thursday came out with an operational framework for issuance of social bonds, sustainability bonds and sustainability-linked bonds, which together will be known as Environment, Social and Governance (ESG) debt securities. This will help issuers to raise money for more sustainable projects, assisting in closing the funding gap for the Sustainable Development Goals.

In its circular, Sebi said the debt securities will be labelled as 'social bonds' or 'sustainability bonds' or 'sustainability-linked bonds' only if the funds raised through the issuance of such debt securities are proposed to be utilised for financing or refinancing projects. The regulator has addressed the initial and continuous disclosures for sustainable securitised debt instruments that would be based on international frameworks.

Initial disclosures would be made in the offer document for the securities, while continuous disclosures would be included in annual reports or other mandated formats. Sebi said that an issuer desirous of issuing social bonds will have to make additional disclosures in the offer document for public issues or private placements. 

These included social objectives of the social project, brief details of the decision-making process followed for determining the eligibility of projects, details of the procedures to be employed for tracking the deployment of the proceeds and details of an indicative estimate of distribution of proceeds between financing and refinancing of projects.