Sovereign Green Bonds (SGrBs)

7.Sovereign Green Bonds (SGrBs): India's efforts to finance green investments through Sovereign Green Bonds (SGrBs) face low investor demand, limiting the government's ability to secure a green premium (lower yields than regular bonds).

• About Green Bond: It issued by any sovereign entity, inter-governmental groups or alliances and corporates with the aim that the proceeds of the bonds are utilised for projects classified as environmentally sustainable.
• They are financial instruments that finance green projects and provide investors with regular or fixed income payments, announced in the Union Budget 2022-23.
• First ever green bond: Issued by the World Bank in 2008.
• Significance: Importance financial instrument has emerged as an important financial instrument to deal with the threats of climate change and related challenges.

oCollaboration: It’s critical to connect environmental projects with capital markets and investors and channel capital towards sustainable development.

oCarbon footprint: It will further reduce the carbon footprint of the country.

oFor investors:  A platform to engage in good practices, influencing the business strategy, provides a means to hedge against climate change risks while achieving at least similar, if not better, returns on their investment.