Executive summary
In October 2022, the Government of India received a "Medium Green" rating with a "Good" governance score for its Sovereign Green Bond Framework, enabling USD 2 billion in issuances to finance climate-resilient projects.
This milestone highlighted India’s commitment to finance a sustainable growth and low-carbon green transition with green bonds. Leveraging internationally recognised methodologies, their Green Bond Program was aligned with global standards and achieved robust governance ratings. India raised USD 2 billion in their first issuances.
India’s ambitious climate commitments
India, the world’s second most populous country and the third-largest greenhouse gas emitter, faces significant challenges balancing economic growth and climate action. Vulnerable to weather-related events, India requires innovative financing solutions to support its climate commitments, including achieving net-zero emissions by 2070 and reducing emissions intensity by 45% by 2030.
The Government of India launched its Sovereign Green Bonds to raise funds for renewable energy, climate adaptation, clean transportation, and biodiversity conservation projects. The technical validation underpinned investor confidence and ensured alignment with Green Bond Principles and other internationally recognised standards and guidelines.
"This approval will strengthen India’s commitment towards its Nationally Determined Contribution (NDC) targets, adopted under the Paris Agreement, and help attract global and domestic investments in eligible green projects. The proceeds will be deployed in public sector projects to reduce the economy's carbon intensity." Union Finance Minister Smt. Nirmala Sitharaman approves India’s First Sovereign Green Bonds Framework.
Addressing transition risks in a coal-dependent economy
India’s coal-reliant energy sector, contributing over 50% of national emissions, posed significant transition risks. Developing a credible green bond strategy required balancing ambitious climate goals with economic and social equity. Additional challenges included:
Ensuring robust governance to manage proceeds and prevent greenwashing.
Establishing clear, quantifiable criteria for project eligibility in a rapidly evolving policy environment.
Addressing investor concerns around climate risks and exclusions for fossil-fuel-related projects.
Crafting a framework for sustainability and investor confidence
A rigorous analytical approach was applied to assess the Sovereign Green Bonds' environmental and economic impacts. Key components included:
Comprehensive governance assessment: Evaluated India’s inter-ministerial Green Finance Working Committee for oversight and transparency.
Environmental and financial risk evaluation: Projects were analysed for lifecycle emissions, climate risks, economic feasibility, and alignment with sustainability objectives.
Tailored exclusions: To mitigate lock-in risks, expenditures related to fossil fuels, large-scale hydropower, and environmentally sensitive areas were excluded.
Stakeholder engagement: Collaborative workshops with Indian ministries ensured alignment with national policies and international best practices.
Delivering results: USD 2 billion raised for financing the green transition with green bonds
India’s first sovereign green bond issuance in January 2023 was oversubscribed, raising USD 2 billion at favourable yields. Key outcomes included:
Strengthened investor confidence: The framework’s "Medium Green" rating and governance score attracted global and domestic investors.
Market development: The successful issuance spurred growth in India’s domestic green bond market, paving the way for private issuers to enter the market confidently.
Climate and economic impact: Proceeds were allocated to renewable energy, clean transportation, and climate adaptation projects, reducing emissions intensity and enhancing infrastructure resilience.
Building partnerships for long-term impact
Our collaboration with India’s Ministry of Finance and the World Bank exemplifies our stakeholder-driven approach. We built trust and fostered actionable insights by facilitating workshops, meeting clients where they are and guiding them to desired end goals. The issuance also catalysed broader market participation, enabling private-sector issuers to adopt green financing practices.
Scaling green finance globally
The success of India’s green bond program exemplifies a scalable model for emerging economies. By aligning financing strategies with sustainability goals, India has set the stage for significant private capital mobilisation to meet its 2070 net-zero target. Accrona can replicate this model for governments and corporations worldwide, advancing the global green finance agenda.
Bjarni Herrera, then the COO of CICERO Shades of Green, oversaw this project engagement and stakeholder collaboration with a strong team of analysts, including Knut Alfsen, then Senior Advisor, contributed to delivering a rigorous assessment that informed India’s first green bond issuance, securing USD 2 billion to finance climate-resilient projects.
This case underscores Accrona’s teams’ ability to deliver high-impact, sustainable finance solutions and advisory relying on our extensive experience. From ensuring compliance to enhancing market confidence, our expertise in green finance enables clients to achieve measurable results and long-term value. Contact Accrona to transform your sustainability ambitions into actionable outcomes.