Sebi issues new ESG debt framework to regulate social, sustainability, and linked bonds
(You can now subscribe to our
(You can now subscribe to our ETMarkets WhatsApp channel
To encourage responsible finance and curb "purpose-washing," capital markets regulator Sebi has released a detailed framework for issuing and listing ESG (Environment, Social and Governance) debt securities, excluding green bonds.The new norms, which came into effect on June 5, aim to enhance transparency, credibility, and accountability in the ESG debt market.According to Sebi, ESG debt securities will now include three major categories apart from green bonds — social bonds, sustainability bonds , and sustainability-linked bonds . These instruments must follow recognized global standards such as the ICMA Principles, Climate Bonds Standard, ASEAN Standards, or any methodology notified by Indian financial regulators.Social bonds are meant to raise money for projects with a direct social impact, such as affordable housing, clean water, education, or food security. Sustainability bonds combine both environmental and social objectives, while sustainability-linked bonds are performance-based instruments, where the financial terms are tied to the issuer's achievement of pre-set sustainability targets.Issuers of such bonds will need to make detailed disclosures before and after the issue. They must outline the specific projects they intend to fund, explain how they will track fund usage, and appoint independent third-party reviewers to verify claims. Post-listing, companies must share impact reports, usage of proceeds, and KPIs in their annual reports. This is aimed at curbing the misuse of ESG labels — known as 'purpose-washing' — where companies falsely claim to be funding ESG projects.Sebi has also made it clear that companies listed on SME platforms and looking to issue ESG debt will need to follow bi-annual disclosure norms, as specified in the circular's annexures. The regulator has empowered ESG rating agencies and certified reviewers to ensure proper assessments of bond impact and target adherence.Importantly, if any ESG funds are found misused or the projects do not align with their stated purpose, companies may be forced to redeem the securities early.This regulatory push comes at a time when ESG investing is gaining traction in India. By aligning local frameworks with international norms, Sebi aims to build investor confidence and deepen India's ESG debt market responsibly.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
an hour ago
- Time of India
Explained: The power of compounding through SIPs in mutual funds
When it comes to building long-term wealth, one of the most powerful tools investors have at their disposal is compounding. And when you combine compounding with Systematic Investment Plans (SIPs) in mutual funds , it creates a simple and effective path to achieving financial goals—be it retirement, buying a house, or your child's education. What is compounding? Explore courses from Top Institutes in Please select course: Select a Course Category Technology Operations Management MCA Digital Marketing Data Analytics MBA Project Management Artificial Intelligence Public Policy Data Science Degree Leadership Data Science Design Thinking CXO Others Cybersecurity others Product Management Healthcare Management Finance PGDM healthcare Skills you'll gain: Duration: 12 Weeks MIT xPRO CERT-MIT XPRO Building AI Prod India Starts on undefined Get Details At its core, compounding means earning returns not just on your original investment, but also on the returns earned previously. Over time, this creates a snowball effect—your money earns money, and that money also starts earning. The longer you stay invested, the more pronounced the effect becomes. Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Real-Time Conversations in 68 Languages? AI Just Made It Possible Enence 2.0 Undo Also Read | Mutual fund houses launch over 100 passive funds in 2025. Will Sebi's new rules shift the trend? How SIPs harness the power of compounding SIP is a disciplined way to invest a fixed amount regularly—monthly, quarterly, or even weekly—in a mutual fund scheme. While SIPs help average out market volatility through rupee cost averaging, their true magic lies in how they make compounding work more efficiently over time. Live Events By investing consistently through SIPs, even small amounts can grow significantly due to the compounding effect. Each SIP installment earns returns, and those returns are reinvested and continue to earn more. The longer you stay invested, the more the compounding effect multiplies your wealth. An example to understand the impact You start a SIP of Rs 10,000 per month, and the mutual fund gives an average annual return of 12%. You plan to invest for 20 years. The yearly SIP investment - Rs 10,000 × 12 months = Rs 1,20,000 per year The total invested period - 20 years Rs 1,20,000 × 20 = Rs 24,00,000 The maturity amount after 20 years at 12% return using SIP compound interest formula or calculator = Rs 99,90,000 (approximately Rs1 crore) Amount you invested: Rs 24,00,000 Wealth created through compounding: Rs 75,90,000 % of return through compounding: approximately 76% of the total maturity value Here, compounding has worked quietly in the background, helping you build more than four times your actual investment. Also Read | This Rs 40,000 crore large & midcap fund multiplies lumpsum investment of Rs 1 lakh by 15 times in 15 years Why time is more important than amount Many investors delay investing because they think they need a large amount to begin. But with compounding, time in the market matters more than timing the market. Starting early—even with a small SIP—can yield better results than starting late with a larger amount. How to maximise the benefits of compounding through SIPs The most important thing to do for compounding through SIP is start early as the earlier you begin, the more time your money has to grow. Secondly, one should stay consistent which means that don't stop SIPs due to short-term market volatility. Thirdly, stay invested for the long term because compounding rewards patience. Lately, increase SIP amount over time which means that gradually raise your SIP as your income grows to enhance corpus. SIPs are one of the most convenient and effective ways to benefit from the power of compounding . They make market investing simple for everyone—from beginners to seasoned investors. By starting early, staying invested, and being consistent, you can put compounding to work and create meaningful wealth over time. One should always remember that it's not just how much you invest, but how long you stay invested that truly makes the difference.
Economic Times
an hour ago
- Economic Times
Valuations ahead of earnings — Time for bottom-up value picks: Shrikant Chouhan
Q) The second half of 2025 started on a volatile note. How are you looking at the markets? One of the reasons could be FIIs selling, which continues in July. Live Events Q) IPOs have picked up recently, but EY report highlighted that Indian IPO activity in the first half of 2025 recorded 108 deals raising US$4.6b, demonstrating market resilience despite a 30% decline in transactions. Q) What is the initial sense you are picking up from the June quarter results, which have started to come out? Q) Is the current equity market rally largely liquidity-driven, or are there sufficient earnings fundamentals to back the optimism? Q) SIPs crossed Rs27K – what does it talk about the retail investor behaviour change? Q) Where are the pockets of opportunities coming from? Q) Where is the smart money moving? Q) How should one play the small & midcap space? (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel In this edition of ETMarkets Smart Talk, we caught up with Shrikant Chouhan , Head of Equity Research at Kotak Securities , to decode the current market setup amid rising volatility and persistent FII Indian equities trade in a tight range with global uncertainties weighing on sentiment, Chouhan emphasizes the importance of bottom-up, value-driven investing , especially in a landscape where valuations appear to be running ahead of earnings He shares insights on retail investor behaviour, IPO momentum, sectoral opportunities, and why smart money is gravitating toward hospitals, digital-first firms, and capital market-linked businesses. Edited Excerpts –Markets are trading in a tight range, and we believe they will remain directionless until clarity emerges on tariff-related announcements from Mr. Trump. Aggressive buying is absent, as investors are selectively hunting for continue to sell, largely due to stretched valuations and the attractiveness of the US bond market. Additionally, a weaker currency—hovering around 86—adds to the negative sentiment for foreign enthusiasm is being driven by retail flows and QIP money, but sustainability depends on post-listing performance. Value-backed companies will still find takers, even if broader activity moderates.Q1FY26 results so far lack surprises, coming in largely in line or slightly below are witnessing a classic bottom-up approach in the market, supported by strong domestic macro investors are on the right path—sticking to a disciplined strategy that aligns with long-term wealth creation. This shift in behavior seems structural, not a market where valuations run ahead of earnings, the only prudent strategy is selective, bottom-up, and value-driven capital market-linked businesses, and digital-first companies appear to be in the spotlight, steadily attracting fresh investments from informed investors and institutions selection demands caution. Before investing, give top priority to corporate governance, analyze the P&L and balance sheet, and assess the company's market share and business model in depth.: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Economic Times
an hour ago
- Economic Times
Don't short this market; better days ahead post tariff resolution: Ajay Bagga
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel "So far, there have been broad disappointments—except perhaps refining margins, which have performed better. But overall, margins have declined across most sectors. Even in banking, we've seen higher provisions and lower margins due to rate cuts. So overall: disappointing earnings, high valuations, and unsupportive global cues—that's the current story of the Indian markets ," says Ajay Bagga , Market three major factors were pressuring the Indian markets on Friday. If we look globally, markets were down—MSCI Asia closed 1% lower, MSCI Europe, midway through the session, was down about 0.6%, and MSCI Emerging Markets were down 0.7%. So, the correction was reason behind this is, firstly, the strong recovery from April onwards. We saw a dip approaching the July deadlines, which were then rolled over to August 1st. As we approach that date, markets are reacting to the heavy news flow expected next week, including the Fed meeting and the August 1st deadline. Global markets are a bit cautious, and Indian markets are reflecting this is the fourth consecutive week of decline for the Nifty , largely driven by FPI selling, which is more due to valuation concerns. Nifty's one-year forward P/E is still around 23.5 times. The expectation was that, given last year's slowdown from March to September, this year's June YoY numbers would benefit from the base effect, and we'd see double-digit overall earnings growth—but that hasn't far, there have been broad disappointments—except perhaps refining margins, which have performed better. But overall, margins have declined across most sectors. Even in banking, we've seen higher provisions and lower margins due to rate cuts. So overall: disappointing earnings, high valuations, and unsupportive global cues—that's the current story of the Indian a confusing market. Let me give you two quick pharma. Despite President Trump promising tariffs on pharma by the end of the week, we saw a rally in the sector on Friday. That's puzzling, as pharma is one of the sectors most at risk this look at the broader market: ₹1.5 lakh crore worth of shares have been offloaded by promoters and PE funds with minimal impact cost. The market has absorbed it. The primary market is in a frenzy—we are headed for a historic high in fundraises. The QIP for the biggest bank came in at ₹25,000 crore and attracted bids worth over ₹1 lakh there's ample liquidity and appetite. Retail investors are providing an exit to FPIs. It's a bipolar market—retailers are buying while institutions are exiting, and that sentiment is keeping the market resilient. When this sentiment shifts—and a big trigger could be the India-US tariff announcement expected around mid to late August—there could be a major FPI short squeeze (currently 85% net short).So, I wouldn't recommend shorting this market. I'd recommend having faith in it. We'll see better days once the uncertainty around US tariffs is the UK FTA, the UK Parliament has approved it, but it may take a year to implement. So, let's wait and see. It'll benefit labour-intensive sectors like textiles, leather, gems and jewellery, small machinery, chemicals, organics, and seafood. Indian professionals working in the UK on short-term visas could save an estimated ₹4,000 crore annually—a significant it's a positive development, but the markets haven't reacted much yet—possibly because implementation details are still unclear, and the UK Parliament has yet to finalise surprising how auto stocks started moving up mid-week. I was taken aback because the fundamentals are quite weak. Demand is suffering. The only bright spots are tractors and possibly India, there's a divide: urban consumption is still challenged, while rural consumption is relatively strong. So, auto companies that cater to rural markets will do better. Tractor sales are expected to cross 1 million this year—that's a good sign, and we should see better margins for tractor motorcycles—are mostly sold in semi-urban and rural areas (60-70%). They should perform well. Once the harvest season arrives in October, we could see further the rest of the segment is under pressure. We're facing risks from Chinese rare earth exports—EV production has already been cut in July and could halt in August if we don't get essential components like top of that, the Trump tariffs—25% on auto and auto ancillaries—are already in place. Global auto majors like Volvo, Volkswagen, Stellantis, and GM have each estimated earnings hits between $500 million and $1 billion due to these tariffs. So, it's hard to see how smaller Indian players will escape the fallout.I wouldn't bet on the auto segment just yet—unless India secures a carve-out similar to Japan's 15% tariff. If we get that, auto stocks could rally. But as of now, it's a binary and difficult decision. Fundamentals are weak, but news flow could flip the I'd say: start nibbling slowly, but wait till August. Once there's more clarity on India's tariff treatment, especially from the US, we'll have a better sense of direction.
