With the objective of de-concentration and diversification of the infrastructure investment portfolio of insurers, and from the perspective of participation in environmental, social and governance (ESG) initiatives and for proactive participation in sustainable development and in preventing environment degradation, insurance companies are encouraged to consider investing in sovereign green bonds, the Insurance Regulatory and Development Authority of India (Irdai) said in a circular.
“Investment in sovereign green bonds shall be treated as investment in infrastructure and shall be classified as Central Government Securities,” according to the circular issued on January 13.
The government of India, with the objective of reducing the carbon intensity of the economy and as a measure for achieving Nationally Determined Contribution (NDC) under the Paris Climate Change Accord, 2015, proposed to issue Sovereign Green Bonds (SGrBs) in the Budget for 2022-23.
India plans to raise Rs 16,000 crore ($1.96 billion) through the issue of sovereign green bonds this fiscal. The Reserve Bank of India is scheduled to offer green bonds in auctions on January 25 and February 9.
Notably, Irdai had earlier held detailed discussions with its members on the need to ensure necessary diversification, avoidance of concentration in a particular class of investments, facilitating infrastructure-related investments and regular monitoring of the investments of insurers.