The Reserve Bank of India (RBI) has issued guidelines for acceptance of green deposits for banks and NBFCs where the funds can be used for green projects.
According to the Indian Express, the purpose and rationale of the framework is to encourage RE’s to offer green deposits to customers, protect interest of the depositors, aid customers to achieve their sustainability agenda, help augment the flow of credit to green projects and address greenwashing concerns.
The RBI said the allocation of proceeds raised from green deposits should be based on the official Indian green taxonomy.
Pending finalisation of the taxonomy, as an interim measure, REs would be required to allocate the proceeds raised through green deposits towards a specified list of green activities/projects.
The Indian Express noted that the projects must encourage energy efficiency in resource utilisation, reduce carbon emissions and greenhouse gases, promote climate resilience and/or adaptation and value and improve natural ecosystems and biodiversity.
Renewable energy, energy efficiency, clean transportation, climate change adaptation, sustainable water and waste management, and green buildings, are among the list of projects/activities where REs could allocate the proceeds raised through green deposits.
Morningstar Sustainalytics, a global provider of ESG research, ratings and data, has recently launched its low carbon transition ratings.
According to Morningstar, the ratings are designed to provide investors with a forward-looking science-based assessment of a company’s current alignment to a net-zero pathway that limits global warming to 1.5 degrees.
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