RBI Issues Green Deposit Guidelines to Boost Renewable Energy and Tackle Greenwashing Concerns
The Reserve Bank of India (RBI) has published guidelines for banks and non-banking financial companies (NBFCs) to accept green deposits, with the intention of utilizing funds for green projects. As per the Indian Express, the framework aims to encourage renewable energy (RE) providers to offer green deposits to customers, safeguard depositors’ interests, assist customers in achieving their sustainability goals, enhance the flow of credit to green projects, and tackle greenwashing concerns.
The RBI has stated that the allocation of proceeds from green deposits must follow the official Indian green taxonomy. Until the taxonomy is finalized, REs must allocate proceeds raised through green deposits towards a specified list of green activities/projects that promote energy efficiency, reduce carbon emissions and greenhouse gases, encourage climate resilience or adaptation, 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 and activities where REs can allocate proceeds raised from green deposits. Morningstar Sustainalytics, a global ESG research, ratings, and data provider, has recently launched low carbon transition ratings designed to offer investors a forward-looking, science-based evaluation of a company’s current alignment with a net-zero pathway that limits global warming to 1.5 degrees.
