Latest news with #ESG-labelled
Mint
a day ago
- Business
- Mint
Sebi's stricter ESG debt rules may deter mid-sized firms
The capital market regulator's new rules for continuous monitoring and third-party verification of ESG-labelled bonds could raise compliance burden and deter participation of mid-sized firms, experts said. The Securities and Exchange Board of India's (Sebi's) circular, effective 5 June, aims to combat 'purpose-washing" or the misrepresentation or exaggeration of the social or environmental intent behind ESG bond proceeds. The framework to ensure such debt issuances remain aligned with clearly stated and measurable goals brings India's regulatory stance closer to global standards. 'By incorporating factors like third-party verification, comprehensive disclosures about the issuer decision-making process, project selection and deployment, brings a lot of accountability on the issuer of these securities and acts as a much-needed confidence-building measure for investors," said Swati Agrawal, chief executive officer and president at CareEdge Advisory. 'Mandatory requirement of third-party review/certification is the right step to address growing concerns on green-washing of claims made by issuers." Agrawal, however, warned that the capacity to meet such detailed obligations is uneven across India Inc., with mid-sized firms still finding them difficult. "While large companies are well-positioned to understand these concepts and requirements around them, mid-size companies still find these tasks onerous and less value-accretive." Also Read: Sebi introduces verified UPI handles for market payments from 1 October The compliance requirements, especially for sustainability-linked bonds (SLBs), tied to key performance indicators (KPIs) and sustainability performance targets (SPTs) are perceived as both technically complex and financially burdensome for smaller firms. 'This trade-off needs to be balanced by a regulator," Agrawal said, advocating a consultative process with market participants for continuous review to make the instruments attractive. The State Bank of India (SBI) raised over ₹30,000 crore through social bonds in 2024, placing it among the top global non-sovereign issuers, according to the Climate Bonds Initiative. Continuum Green Energy ( ₹56.8 trillion), REC Ltd ( ₹4,300 crore), DME Development Ltd ( ₹775 crore), and Pimpri Chinchwad Municipal Corporation ( ₹200 crore) also raised funds by issuing green bonds last year, showed data provided by Icra Ltd. Separately, Sebi data as of 30 April showed that L&T Infrastructure Finance raised ₹667 crore via green bonds, while municipal corporations such as Vadodara and Ahmedabad issued green bonds worth ₹100 crore and ₹200 crore, respectively. Shriram Finance ($500 million) and Indiabulls Housing ($350 million) tapped the global markets for social bonds, Icra data showed, reflecting growing private sector participation in ESG-linked funding. Third-party review Legal experts warn that while the new framework elevates the integrity of ESG claims, it may inadvertently lead to a bifurcated market—where only large companies with ESG capacity can participate meaningfully. 'The standards to be followed by entities for investing in green and ecologically sustainable technology are prohibitively expensive," said Radhika M. Dudhat, partner at Shardul Amarchand Mangaldas & Co. 'This financial barrier incentivized companies to claim ESG alignment without making the necessary investments, leading to purpose-washing." Regulatory diligence needs to be matched with rigorous scrutiny, Dudhat said. 'While an entity may be ESG compliant 'on-paper', it is important to ascertain whether or not they are creating a false narrative of complying with the applicable regulatory framework." To mitigate this, she emphasized the role of lending institutions like banks and investment companies in reviewing and verifying compliance with a complete chain of data and documentation. Also Read: Sebi engages with venture capital funds directly to smoothen transition to AIF The new circular also mandates quantification of negative externalities and early redemption provisions in case of deviation from stated ESG objectives. Issuers will have to appoint independent third-party reviewers to verify alignment and monitor progress. While this strengthens governance, experts believe that regulatory guidance must be paired with ecosystem-level support. 'Emphasis can be given on capacity building at the industry associations level, sharing of best practices and guidance at knowledge forums and regular review of these frameworks and their effectiveness," said Agrawal. Sebi's framework could also serve as a guidebook for issuers if supported with targeted assistance, ESG assessment firms said. 'Having clear guidance on which ESG debt instrument suits their fund requirements will help in aligning with their corporate ESG strategies or objectives," said Amishi Kapadia, partner at Deloitte India. 'For a fundraise, issuers may need support for selection of eligible projects or key performance indicators (KPIs) or sustainability performance targets (SPTs) to ensure alignment with the global frameworks," she said. Closer to global standards Experts agree that the framework moves India closer to international ESG standards by enforcing third-party validation and mandating 'true to label" financing. 'In a well-regulated environment, the third-party reviewers acted as independent gatekeepers ensuring that ESG-labelled instruments are genuinely aligned with sustainability objectives and not merely used for reputational gain," said Sheetal Sharad, chief rating officer at ICRA ESG Ratings. Also Read: Bar Council notifies rules allowing foreign law firms limited practice in India However, she also warned that issuers face systemic challenges in building out ESG infrastructure. 'A key gap lies in capacity building and awareness, especially among entities with lower ESG maturity, who may lack the internal expertise to navigate complex sustainability-linked requirements." Without standardized disclosure norms, reporting can become fragmented, Sharad said. 'The role of an independent review becomes especially valuable, as it can enhance credibility, ensure alignment with best practices, and provide assurance to investors and stakeholders regarding the integrity of ESG commitments."
Mid East Info
2 days ago
- Business
- Mid East Info
Emirates NBD wins record eight awards at Euromoney Awards for Excellence 2025 - Middle East Business News and Information
Bank wins five regional awards including 'Middle East's Best Bank 2025' showcasing a landmark year of strategic expansion, digital leadership and financial performance • Winner of three UAE awards including 'UAE's Best Bank', 'UAE's Best Bank for ESG' and 'UAE's Best Investment Bank for Equity Capital Markets (ECM)' Dubai, United Arab Emirates,June 2025: Emirates NBD, a leading banking group in the Middle East, North Africa and Türkiye (MENAT) region, is celebrating its success at the Euromoney Middle East Awards for Excellence 2025 with eight new wins. Surpassing its 2024 performance at the awards, Emirates NBD has won five regional awards including the 'Middle East's Best Bank'. Recording exceptional financial performance in 2024, Emirates NBD announced net profit of AED 23 billion, up 7%, while credit showed standout growth. Emirates NBD's international operations now account for 31% of total income, reflecting the success of its expansion strategy across the GCC, Asia and Europe. Emirates NBD was also a pioneer in sustainable finance innovation, winning the titles of 'Middle East's Best Bank for ESG' and 'Middle East's Best ESG Deal 2025'. In 2024, the bank issued the world's first sustainability-linked loan financing bond aligned with the updated International Capital Market Association (ICMA) and Loan Market Association (LMA) guidelines, raising USD 500 million. Launching its first sustainable fixed deposit, the bank attracted USD 100 million in inflows. Emirates NBD Capital, the global investment bank for Emirates NBD Group, facilitated more than USD 34 billion in sustainable finance during the year – ranking as a top 12 global coordinator of emerging market ESG-labelled bonds. With an 11% revenue increase from the SME segment, the bank's performance reflected its deep commitment to entrepreneurship, economic diversification and digital innovation, earning the accolade of 'Middle East's Best Bank for SMEs' at the awards. Digitisation continued to underpin Emirates NBD's SME strategy. In 2024, approximately 80% of Emirate NBD's SME accounts were opened digitally, supported by the bank's end-to-end digital customer onboarding journey. Emirates NBD also won the award for the 'Middle East's Best Bank for Customer Experience', having undertaken a comprehensive customer experience transformation over the past 18 months, embedding it across every level of its operations, governance, culture and technology infrastructure, to improve every major customer touchpoint. In parallel, Emirates NBD achieved resounding success at the national level with three awards for 'UAE's Best Bank', 'UAE's Best Bank for ESG' and 'UAE's Best Investment Bank for Equity Capital Markets (ECM) 2025', showcasing asset growth year-on-year of 16% with the bank registering a significant AED 160 billion (USD 43.6 billion) in new loans and maintaining a one-third market share of UAE credit cards. The bank's investment banking arm, Emirates NBD Capital, dominated UAE IPOs, advising on prominent ECM transactions such as the largest grocery retail IPO in MENA for Lulu Retail and the Spinneys IPO, helping attract strong investor demand from various investor categories. Emirates NBD's substantial contributions to sustainable finance were exemplified by its mobilisation of over USD 34.3 billion in sustainable finance, placing it among the top global coordinators for emerging market ESG bonds. Shayne Nelson, Group Chief Executive Officer at Emirates NBD, commented: 'We are delighted to win eight awards this year at the Euromoney Awards for Excellence. Emirates NBD continues to perform and transform as one of the UAE's largest banks and the most profitable financial institution in the region. Through the transition, we endeavour to build deeper connections with our customers by providing immersive experiences. This association, along with our commitment to sustainability, brings deeper loyalty at a time when ESG-centred choices are becoming the norm. As a homegrown financial institution, Emirates NBD prides itself on offering customers unparalleled financial solutions, strengthening our leadership in banking innovation in the country and the region.' The prestigious recognition at the Euromoney Middle East Award for Excellence 2025 is the latest in a series of accolades received by the bank. Emirates NBD was awarded 'Middle East's Best Bank for SMEs', 'UAE's Best Bank for SMEs', 'UAE's Best Bank for Corporates', and 'Middle East's Best Bank for Wealth Management' at the 2024 edition of the Euromoney Awards for Excellence. The bank was also lauded at the 2024 awards by The Banker, namely 'Bank of the Year in the UAE 2024' and 'Best Private Bank in the UAE'. About Emirates NBD: Emirates NBD (DFM: Emirates NBD) is a leading banking group in the MENAT (Middle East, North Africa and Türkiye) region with a presence in 13 countries, serving over 9 million active customers. As of 31st March 2025, total assets were AED 1 trillion, (equivalent to approx. USD 272 billion). The Group has operations in the UAE, Egypt, India, Türkiye, the Kingdom of Saudi Arabia, Singapore, the United Kingdom, Austria, Germany, Russia and Bahrain and representative offices in China and Indonesia with a total of 839 branches and 4,539 ATMs / SDMs. Emirates NBD is the leading financial services brand in the UAE with a Brand value of USD 4.54 billion. Emirates NBD Group serves its customers (individuals, businesses, governments, and institutions) and helps them realise their financial objectives through a range of banking products and services including retail banking, corporate and institutional banking, Islamic banking, investment banking, private banking, asset management, global markets and treasury, and brokerage operations. The Group is a key participant in the global digital banking industry with 97% of all financial transactions and requests conducted outside of its branches. The Group also operates Liv, the lifestyle digital bank by Emirates NBD, with close to half a million users, it continues to be the fastest-growing bank in the region. Emirates NBD contributes to the construction of a sustainable future as an active participant and supporter of the UAE's main development and sustainability initiatives, including financial wellness and the inclusion of people of determination. Emirates NBD is committed to supporting the UAE's Year of Sustainability as Principal Banking Partner of COP28 and an early supporter to the Dubai Can sustainability initiative, a city-wide initiative aimed to reduce use of single-use plastic bottled water.
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Business Standard
05-06-2025
- Business
- Business Standard
Sebi comes out with operational framework for ESG debt securities
Markets regulator Sebi on Thursday came out with an operational framework for issuance of social bonds, sustainability bonds and sustainability-linked bonds, which together will be known as Environment, Social and Governance (ESG) debt securities. This will help issuers to raise money for more sustainable projects, assisting in closing the funding gap for the Sustainable Development Goals. In its circular, Sebi said the debt securities will be labelled as 'social bonds' or 'sustainability bonds' or 'sustainability-linked bonds' only if the funds raised through the issuance of such debt securities are proposed to be utilised for financing or refinancing projects. The regulator has addressed the initial and continuous disclosures for sustainable securitised debt instruments that would be based on international frameworks. Initial disclosures would be made in the offer document for the securities, while continuous disclosures would be included in annual reports or other mandated formats. Sebi said that an issuer desirous of issuing social bonds will have to make additional disclosures in the offer document for public issues or private placements. These included social objectives of the social project, brief details of the decision-making process followed for determining the eligibility of projects, details of the procedures to be employed for tracking the deployment of the proceeds and details of an indicative estimate of distribution of proceeds between financing and refinancing of projects. In case of refinancing, details of the existing debt are proposed to be refinanced, including the amount outstanding. The issuer is required to appoint an independent third-party reviewer/ certifier to ascertain that the ESG-labelled debt securities are in alignment with any of the recognised standards. An issuer desirous of issuing sustainability bonds will have to comply with the provisions specified for green debt security. An issuer of social bonds or sustainability bonds will have to ensure that all projects funded by the proceeds of such securities meet the objectives of social bonds or sustainability bonds and utilise the proceeds only for the stated purpose, as disclosed in the offer document. "Certain social projects may also have environmental co-benefits, and that certain green projects may have social co-benefits. The classification of a debt security as a green debt security, social bond or sustainability bond should be determined by the issuer based on its primary objectives for the underlying projects," Sebi said. While raising funds for social objects or sustainability objects, an issuer will have to continuously monitor to check whether the form of operations undertaken is resulting in reduction of the adverse social impact or sustainable impact, as envisaged in the offer document. The framework will come into force for issuances of ESG debt securities with effect from June 5, 2025.
Zawya
14-03-2025
- Business
- Zawya
Cameroon publishes sustainable finance framework
Cameroon has completed a sustainable finance framework that identifies projects supporting the country's sustainable development and could herald sovereign ESG-labelled debt issuance or blended finance initiatives. Cameroon's last major financing was a US$550m private placement in July. The 9.50% July 2031 amortiser had a weighted-average life of five years and a yield of 10.75%. The country also has a US$103m note due this year. The framework shows that more lower middle-income economies are seeking to raise sustainable finance to close the climate funding gap. The market saw several debut ESG-labelled bonds from sovereign issuers in developing countries in 2024. The sustainable bond format remains popular due to its mix of green and social categories and was used by Madagascar and Honduras last year, while Sudan, Botswana and El Salvador opted for social bonds. Other West African countries including Senegal, Ivory Coast and Benin already have frameworks in place. Cameroon's new framework has identified eligible green projects including renewable energy, natural resources and land, biodiversity, clean transport, green buildings and energy efficiency, among others, and the country also intends to finance various adaptation efforts to make infrastructure more resilient to physical climate risks. Social projects include access to essential services, basic infrastructure and housing, as well as employment and food security. In 2024, an estimated 3.3 million people required humanitarian assistance, according to the United Nations. The government is planning to allocate two-thirds of proceeds to green projects, including a significant share to blue projects, and the remainder will finance social projects. Most of the expenditure will be new financing, according to S&P, which provided a second-party opinion on the framework. NDC aligned The eligible projects align with Cameroon's nationally determined contributions under the Paris Agreement on climate change, which was put in place in 2021, as well as its Vision 2035 and National Development Strategy. Cameroon's NDC increased its emissions reduction target to 35% by 2030 compared with 2010 but 23% of that target is conditional on international support in the form of financing, technology transfer and capacity building, while the remaining 12% will come from Cameroon's efforts. The country is at the crossroads of Central and West Africa and faces uncertainty across political, social, economic and security environments and significant challenges including poverty, food security, inequality and human rights despite a wide range of natural resources from oil and gas and mineral ores to timber and agricultural products. Forestry covers 42% of the country's land mass which includes the Congo Basin, the Sanaga River and Lake Chad. Cameroon is particularly exposed to environmental problems around water, land use and biodiversity and social problems, including a long-running armed conflict with separatists, all of which could be amplified by the effects of climate change. Cameroon is due to hold elections in October. It is a member of the Economic and Monetary Community of Central Africa and its members, which also include Gabon, Chad, Equatorial Guinea, Central African Republic and the Republic of Congo, share monetary policy and currency with a common central bank.
