India capitalizes on sovereign ESG momentum
Corporate governance challenges and a lack of domestic demand have constrained ESG issuance in India so far. The blowout dual-tranche domestic rupee sovereign green bond in January could be set to change that.
Timing is everything.
The sale of India’s first sovereign green bond should have been a triumph for the government in terms of its environmental, social and governance (ESG) credentials.
But the noise created by this event in late January was soon drowned out by the unrelated, yet sensational scandal regarding governance issues at Adani Enterprises, one of India’s top conglomerates.
Publication of a damning short-seller report by US activist fund Hindenburg Research wiped about $100 billion off the market value of Adani Group entities in a matter of days and raised corporate governance red flags about the politically connected firm.
Welcome to the world of ESG in India, where the news cycle flips between the positive and the negative with shocking speed. While investors and analysts are now assessing what the problems at Adani could mean for India’s markets, the government must be concerned about what the scandal means for India’s green vision.
The sovereign green bond is one of the clearest signs yet from the government of its bold transition goals – and how it intends to achieve them.