SEBI Proposes Tighter Norms For Green Bond Third-Party Reviewers

The Securities and Exchange Board of India on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.

In a draft circular, SEBI said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.

The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.

Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expertise in assessing ESG debt securities.

The scope of the review conducted by the independent third-party reviewer/ certifier will be specified in the offer document, and the reviewer may provide second-party opinions, verifications, certifications, or ESG scores.

The markets watchdog has also allowed Sebi-registered ESG rating providers to act as reviewers, subject to the same conditions.

The Securities and Exchange Board of India has invited public comments on the draft circular till Aug. 21.