Blue and Yellow Bonds

What is in the News ?

• Markets regulator Sebi on Friday strengthened the framework for green bonds by introducing the concept of ‘blue’ and ‘yellow’ bonds as new modes of sustainable finance.
• For this, the Securities and Exchange Board of India (SEBI) amended norms governing issue and listing of non-convertible securities.
• The amendment came after the Board of SEBI approved a proposal in this regard in December.

Green Debt Securities

• Sebi broadly defines green debt security as one that is issued for the purpose of raising capital to be used for the cause of sustainable development or furthering energy efficiency.
• Sub-Categorization of Green Debt Securities :
• Blue bonds : It is a debt instrument issued by governments, development banks or others to raise capital to finance marine and ocean-based projects that have positive environmental, economic and climate benefits.
• Yellow Bonds : Debt-instrument issued to raise money for solar energy.
• Transition Bonds : These are debt-instrument issued to raise money to fund a firm’s transition to a more sustainable way or to reduce their carbon emissions.
• These measures have been taken to align India’s framework for green debt securities with the updated Green Bond Principles (GBP) recognised by IOSCO. 

Green Bond Principles (ICMA)

• The Green Bond Principles (GBP), together with the Social Bond Principles (SBP),
  the Sustainability Bond Guidelines (SBG) and the Sustainability-Linked Bond Principles (SLBP) are published under the governance of the Principles. 
• The Principles are a collection of voluntary frameworks with the stated mission and vision of promoting the role that global debt capital markets can play in financing progress towards environmental and social sustainability. 
• The Principles outline best practices when issuing bonds serving social and/or environmental purposes through global guidelines and recommendations that promote transparency and disclosure, thereby underpinning the integrity of the market. 
• The Principles also raise awareness of the importance of environmental and social impact among financial market participants, which ultimately aims to attract more capital to support sustainable development. 

 IOSCO

• The International Organization of Securities Commissions (Est. 1983, HQ: Madrid (Spain)) is an association of organizations that regulate the world’s securities and futures markets. 
• SEBI is a member of it.

Practice Questions for Prelims

Math the following:

1. Blue bonds i) To raise money to fund a firm’s transition to a more sustainable way or to reduce their carbon emissions
2. Yellow Bonds ii) To raise capital to finance marine and ocean-based projects
3. Transition Bonds iii) Debt-instrument issued to raise money for solar energy

Choose the correct codes:
a) 1-i), 2- ii), 3- iii)
b) 1- ii), 2- iii), 3- i)
c) 1- ii), 2- i), 3- iii)
d) 1- i), 2- iii), 3- ii)

Ans. b)

Chetan Bharat Learning is the best institute in Chandigarh for UPSC IAS ,PCS preparation. To know more about Chetan Bharat Learning’s Online & Classroom Courses, click on the following links: