SEBI initiates strict guidelines for green bond reviewers to restrict disputes

SEBI initiates strict guidelines for green bond reviewers to restrict disputes

Invites public comments on the draft circular till 21 August

The Securities and Exchange Board of India (SEBI) is opting to tighten the rules to appoint independent third-party reviewers or certifiers for green debt securities to align them with demands for other ESG-linked bonds.

SEBI’s draft circular stated that the current norms introduced in February 2023 lacked detailed requisites on reviewer independence, conflict of interest mitigation, and disclosure standards. Thus, under the 2025 circular, these will be in place for ESG-linked securities.

It has sought public comments on the revised framework by 21 August to bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.

Accordingly, the issuers of green debt securities will need to appoint reviewers independent of their management, directors, and key managerial personnel. They will be remunerated in a manner to prevent any conflicts of interest and possess relevant expertise in assessing ESG debt securities.

The review conducted by an independent third-party certifier would be specified in the offer document, and it would provide a second-party opinion, verification, certification and ESG score.

The markets watchdog has also allowed SEBI-registered ESG rating providers to act as certifiers under similar contexts.