Transition Bonds

• To facilitate transparency and informed decision-making among the investors, markets regulator SEBI recently mandated additional requirements for the issuance and listing of transition bonds.
  • The issuer of transition bonds will have to use a denotation ‘GB-T’.
  • The transition plan should contain the details of interim targets, along with an indicative timeline for achieving the targets.
  • The interim targets should also reflect the indicative figure regarding how much emissions the issuer is envisaging to reduce.

About Transition Bonds

• Transition bond is a class of debt instruments, the proceeds of which are used to fund a firm’s transition towards a reduced environmental impact or to reduce their carbon emissions.
• Unlike green bonds that are earmarked to raise money for climate and environmental projects solely , transition bonds can be issued by firms aspiring to reduce their GHG emissions.
• The money can be used for activities that reduce the environmental impact of the business, such as carbon capture and storage, decommissioning coal plants, waste-to-energy, or exclusively financing new and/or existing eligible transition projects.