Sustainable bonds are quickly becoming popular amongst Indian firms. This year alone has seen a sharp spike in funds raised through overseas sustainable bonds. This is because global lenders have made known their preference for companies adopting responsible business practices.
So far, ten Indian firms alone have raised $4.64 billion via sustainable bonds in the overseas market – an incredible five-fold increase from $950 million raised by just two firms in 2020. Such bonds are quickly catching on in India too, with firms like Ultratech Cement, Adani SBI and ReNew Power issuing their respective green bonds.
In that context, Adani Electricity Mumbai Limited (AEML) is all set to conduct the Adani Group’s first sustainable bond sales abroad. The sale is expected to raise around $300 million with a 10-year maturity and will be eligible to qualify for the global Environment, Social and Governance (ESG) fund. The sale of the bonds will contribute to the company’s target of increasing the share of renewable power in its energy procurement mix to at least 60 per cent by 2027.
The strong global shift towards sustainable investing is a major factor for sustainable bonds becoming the new favourite. With investors and shareholders considering ESG and the United Nations’ Sustainable Development Goals (SDG) crucial for decision-making, it is clear why more firms are taking the green route. In addition to companies like JSW Energy, Ultratech and Adani SBI and other financial institutions are also making a play in green financing.
In its recent financial year 2020-21 report, SBI revealed that over $ 4.26 billion had been used to finance renewable projects in India. Through its innovative ‘Renewable Energy Policy’, India’s largest public sector bank promoted solar power, wind energy, small hydro and waste-to-power projects. The total installed renewable energy (RE) capacity stood at 13,801.7MW, involving 752 RE projects, as of March 31, 2021.
India is in a nascent stage when it comes to green debt financing. However, the times are changing as more companies realize the advantages that come with green financing. The potential of sustainable and green bonds in India is humongous. As the world leans further towards ESG and SDG, the contributions made by stakeholders like Adani SBI, Azure Power will propel India towards the list of top countries in sustainable investments.
News Dinbhar 