SEBI's rules for green and ESG debt securities

In India, SEBI decides what a listed bond must disclose before it can call itself green, social or sustainability-linked. SEBI does not approve projects or certify impact. It sets the labels, the disclosures and the checks, so that investors can judge the claim for themselves.

The rules have grown in layers since 2017. Green debt has its own detailed rules. Social bonds, sustainability bonds and sustainability-linked bonds were added in 2025 under a separate framework. In 2026, SEBI brought the reviewer rules for both families into line.

These rules apply to debt securities listed on Indian stock exchanges. Bank loans are not covered, and green deposits fall under RBI.

Timeline of the main rules

The scope of green debt (after February 2023)

Besides the original categories such as renewable energy, clean transport and green buildings, the definition now includes:

• Climate change adaptation, such as more resilient infrastructure and early warning systems.
• Pollution prevention and control, including waste management and sectors under the India Cooling Action Plan.
• Circular economy products, technologies and processes, including eco-efficient products.
• Blue bonds: sustainable water management and the marine sector.
• Yellow bonds: solar energy generation and the industries linked to it.
• Transition bonds: moving to more sustainable operations, in line with India's climate commitments.

Disclosures in the offer document

• How the issuer decides which projects are eligible, including any taxonomy or standard used and the exclusion criteria.
• For transition bonds, how the plan fits India's climate commitments, plus the transition plan details required from May 2023.
• Where unspent money will be parked for the time being.
• The environmental and social risks of the projects and how they will be managed.
• Any impact reporting standard the issuer will follow.
• Details of the independent third-party reviewer and the scope of its review.

Continuous disclosures

• In the annual report: how the money was used, how risk mitigation plans were carried out, and the environmental impact of each project, backed by the reviewer's work.
• In the annual report and financial results: where unspent money is temporarily placed, reported by ISIN.
• Certain BRSR Principle 6 data (energy, water, emissions and waste) in the annual report, even if the issuer is not among the top 1,000 listed companies that must file a BRSR.

Greenwashing do's and don'ts

• Do keep checking whether the funded activities are reducing environmental harm as promised.
• Do measure the negative side effects linked to the projects.
• Don't use the money for anything outside the green debt definition.
• Don't use misleading labels, hide trade-offs or cherry-pick data.
• Don't make claims that wrongly suggest third-party certification.
• If money is used outside the permitted categories, the issuer must disclose this. If a majority of debenture holders require it, the issuer must redeem the bonds early.

The ESG debt securities framework (June 2025)

• Covers social bonds, sustainability bonds and sustainability-linked bonds.
• Only bonds aligned with recognised standards, such as ICMA's principles or the Climate Bonds Standard, may use these labels.
• An independent third-party reviewer or certifier must confirm the alignment.
• Issuers make initial disclosures at issue and continuous disclosures over the life of the bond.

The 2026 reviewer rules for green debt

SEBI's circular of 27 February 2026 replaced the earlier reviewer provision in its master circular for non-convertible securities. It took effect immediately. The reviewer must:

• Confirm that the bond meets the green debt definition, including the project selection criteria and eligible categories.
• Be independent of the issuer, its directors, senior management and key managerial personnel.
• Be paid in a way that avoids conflicts of interest.
• Have expertise in assessing ESG debt securities.

The issuer must disclose the reviewer's details and the scope of the review in the offer document. SEBI's August 2025 consultation paper on these rules described the forms of review in ICMA terms: second-party opinion, verification, certification, and scoring or rating.