IFSCA Framework for Transition Bonds
The International Financial Services Centres (IFSC) Authority has introduced a dedicated framework for Transition Bonds, marking a significant step in aligning sustainable finance initiatives with global standards. These bonds are now formally recognised as ESG-labelled (Environmental, Social, and Governance) debt securities under the IFSC’s Listing Regulations, reflecting a growing focus on green finance in India’s international financial ecosystem.
The newly released framework stems from the recommendations made by an expert committee and follows a period of public consultation. This collaborative and inclusive approach ensures that the Transition Bond framework is both robust and practical, addressing the evolving needs of issuers, investors, and regulators while supporting climate-aligned financing. Transition finance plays a vital role in helping high-emission, hard-to-abate sectors such as steel, cement, and heavy transport gradually shift from carbon-intensive operations (“brown”) to more sustainable, low-carbon (“green”) alternatives. The framework for Transition Bonds provides a viable funding avenue for such industries, enabling them to raise capital while committing to measurable decarbonisation pathways.
As of June 30, 2025, ESG-labelled debt securities, including Transition Bonds, reached a total listing value of USD 15.43 billion on IFSC exchanges. This amount represents approximately 25% of all debt listings on the platform, highlighting the increasing investor appetite for sustainable financial instruments and the IFSC’s growing prominence as a hub for green finance.
As per the framework, the issuer shall appoint independent external reviewer(s) to confirm that the proposed issuance of transition bond is in alignment with the Framework.
