What are SEBI's dos and don'ts for green bond issuers to avoid greenwashing?

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Senseible · Accepted Answer

SEBI's February 2023 circular binds every green debt issuer to seven rules: keep checking the green impact, never use the money outside the green definition, disclose any misuse and redeem early if holders demand it, avoid misleading labels and cherry-picked data, quantify negative externalities and never imply a certification it does not have. SEBI accepts that there is no universal taxonomy, and uses the common definition: making false, misleading, unsubstantiated or otherwise incomplete claims about the sustainability of a product, service or business operation. The rules apply to every issuer that has listed or proposes to list green debt securities. When raising money for a transition, keep monitoring whether the path taken is actually reducing adverse environmental impact as promised in the offer document. Do not use green bond money for anything outside the definition of green debt security in the NCS Regulations. If such misuse comes to light on bonds already issued, disclose it to investors and, if a majority of debenture holders require it, redeem the bonds early. Do not use misleading labels, hide trade-offs or cherry-pick research data to highlight green practices while obscuring unfavourable ones. Maintain the highest standards associated with a green issue while adhering to the rating assigned to it. Quantify the negative externalities of how the money is used. Do not make untrue claims that give a false impression of third-party certification. The dos and don'ts were appended as Chapter IX-A of SEBI's operational circular for non-convertible securities, and the February 2023 disclosure circular makes compliance with them one of the issuer's stated responsibilities. The June 2025 framework applies the same seven-point list, renamed purpose-washing, to social and sustainability bonds. Keep project-level records that tie each rupee spent to an eligible category, because early redemption is a real remedy, not a fine. Report the downsides, such as construction emissions or land use, alongside the benefits. SEBI asks for negative externalities to be quantified, not just mentioned. Describe an external review exactly as it was done. Calling a second party opinion a certification is the kind of claim rule 7 targets.

What are SEBI's dos and don'ts for green bond issuers to avoid greenwashing?

How SEBI defines greenwashing

The seven obligations

Where the rule now sits

What this means in practice

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