ESG, Green bond issues rise sharply in 2021 as Indian firms promote sustainable business

Dealers said companies get amended rates connected their ESG instruments alternatively than the mean fundraising instruments. Bank of America has made a planetary $1.5 cardinal sustainable concern committedness by 2030, which volition absorption connected situation modulation and improvement aligned to the United Nations sustainable improvement goal.

By Manish M Suvarna

Issuances of Green and ESG (Environmental, Social, and Governance) bonds person risen sharply successful calendar twelvemonth 2021 arsenic Indian companies are engaging successful much sustainable concern practices. Indian companies raised astir $7 cardinal done ESG and Green bonds successful 2021, compared to $1.4 cardinal and $4 cardinal successful 2020 and 2019, respectively.

Dealers said companies get amended rates connected their ESG instruments alternatively than the mean fundraising instruments. Bank of America has made a planetary $1.5 cardinal sustainable concern committedness by 2030, which volition absorption connected situation modulation and improvement aligned to the United Nations sustainable improvement goal.

In 2021, JSW Hydro, Greenko, ReNew Power, and Adani Green person been ample issuers of Green bonds. Similarly, Axis Bank AT1, Shriram Transport Finance, Adani Electricity Mumbai, and Ultratech Cement are among the larger fundraisers done ESG bonds.

“Over the past fewer years, Indian companies person go progressively conscious of their c footprint and the interaction of their businesses connected each stakeholders and are keen to research ESG-linked products arsenic they prosecute successful much sustainable concern practices,” said Subhrajit Roy, India head, global superior markets, Bank of America.

Most companies are accessing the way of ESG oregon Green bonds owed to aggregate factors arsenic they are becoming much conscious of the biology interaction and societal responsibilities. Secondly, the absorption of the investors has accrued connected these instruments that led to stronger bids, larger bid books, accrued pricing leverage and a higher prime investors base. As per data, $1.3 trillion has been raised done greenish loans oregon recognition proviso since 2006, of which $1 trillion has travel since 2016 arsenic companies signifier greenish businesses.

Market participants expect issuances of ESG and Green bonds to summation successful the coming years arsenic India has started moving towards the five-point imaginativeness stated by Prime Minister Narendra Modi astatine the COP26 summit. Bank of America expects fundraising done these instruments by Indian firms to interaction $25 cardinal betwixt 2022 and 2024.

“Investor reasoning has evolved from seeing ESG metrics arsenic a tertiary dataset to considering them arsenic an important portion of a company’s concern model. So actively managing a portfolio’s footprint whitethorn assistance lenders oregon investors alteration vulnerability to companies that whitethorn look ineligible and reputational risks arising from biology oregon societal oregon governance concerns,” Roy said.