IFC picks up green bonds worth USD 50 mn from Tata Capital arm

Tata Cleantech Capital, the green funding arm of Tata Capital, on Monday said its equity partner International Finance Corporation has picked up its sustainability-linked bonds worth USD 50 million or about Rs 375 crore.

The bonds are the first in the country by a private financial institution, and the money will help Tata Cleantech Capital — a joint venture between Tata Capital and the IFC — strengthen its position as a leading green financier by funding climate and sustainability projects. The company will use the money to scale up on-lending towards renewable energy projects and diversify into energy efficiency and e-mobility sectors over the next three years, it said, adding this is the first such instrument issued by a private financial institution in the country and will support the shift to a clean energy economy.

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Aligning with our sustainability goals, IFC’s innovative financing structure will strengthen our green financing portfolio apart from helping diversify our borrowings profile in the fight against climate change, said Manish Chourasia, managing director of Tata Cleantech Capital. IFC estimates the country will need around USD 403 billion in renewable finance by 2030 to achieve its renewable targets under which the government has set a target of reducing the carbon intensity by over 45 per cent by 2030 from its 2005 levels.

According to Joon Young Park, the portfolio manager at IFC, the project will provide the much-needed boost to deepen and broaden the country’s debt capital market, which is key to achieving sustainable and inclusive growth. Sustainability linked bonds are a rapidly growing capital market instrument, alongside green, social, and sustainable (GSS) bonds to support global sustainable development. These bonds focus on impact and measurable results, going beyond the end-use-focused approach of GSS instruments, and helping organisations improve performance against the tailor-made environment, social and governance targets that also contribute to the UN’s climate goals.