Context:
Larsen & Toubro (L&T) has launched India’s first ESG (Environmental, Social and Governance) bonds on the National Stock Exchange (NSE), setting a precedent under SEBI’s new sustainability-linked bond framework notified in June 2025.
Key Highlights:
- SEBI Framework: Issued under SEBI’s ESG and sustainability-linked bond framework (effective June 5, 2025)
- Use of Proceeds: Tied to environmental KPIs including reduced freshwater withdrawal and lower greenhouse gas emissions
- ESG Goals:
- Water neutral by 2035
- Carbon neutral by 2040
About SEBI’s ESG Bond Framework
The framework mandates:
- Clear ESG-linked objectives
- Third-party evaluation (like Second-Party Opinions)
- Annual impact reporting against defined KPIs
- Greater transparency in sustainability disclosures
Definition
- Non-Convertible Debentures (NCDs): Fixed-income instruments that cannot be converted into equity shares and are typically used by companies to raise long-term funds.
- ESG Bonds: Debt instruments where proceeds are used to finance projects with environmental, social, or governance benefits.
