Author : PARAG R. BADIRKE (LLM, JGLS)

Article Type - CRG Article

In an era where climate change has become one of the most urgent global concerns, green finance is no longer a policy choice; it has become a market necessity. Green bonds are today widely promoted as having the potential to become powerful financial tools that can channel financing into renewable energy, the clean transport sector, sustainable infrastructure, protection of biodiversity, and climate resilience. However, this dissertation poses an important question that lies at the very core of the green finance debate: can a bond be truly called “green” if the environmental claims on which it is based are not backed by law?


Titled “Green Without Guarantees? Structural Accountability and the Enforceability Gap in India’s Green Bond Regime,” this dissertation investigates the gap between the promise of green bonds and the mechanisms necessary to make them count in the Indian green bond system, known as the Enforceability Gap. It contends that the absence of regulation is not a sign of a weak green bond regime in India. Indeed, India has been creating a vibrant framework via the green debt securities regime of the Securities and Exchange Board of India (SEBI), the regulation of Environmental, Social and Governance (ESG) debt securities, disclosure requirements, external review procedures, and investor protection policies. Bigger issue, however, is that these rules do not always make sustainability commitments legally binding.

The dissertation highlights that green bonds operate at the nexus of two policy fields: climate policy and capital markets. The private funding of public services is a growing phenomenon, generated in the main by a reinterpretation of the public responsibility of states. The transformation has created new possibilities for funding the climate fight, but it has also posed a significant credibility problem. Environmental commitments that are only contained in disclosure documents, marketing narratives and/or opinions of those reviewing the document can have an impact on investors but may not necessarily have strong legal implications if breached.

One of the main strengths of this dissertation is that it doesn't just consider greenwashing as a corporate issue, it is a structural regulatory issue. In addition to the intentional misrepresentation of investors, greenwashing can also be done by the legal system by failing to adequately test "weak" sustainability claims, the rules permitting them, and the lack of effective enforcement and meaningful remedies for investors. This turns it into an architectural rather than just a behavioural problem.

The key conclusion of the doctoral thesis is that India's primary problem is related to verification and assurance supervision. In order for disclosure to be useful, the information disclosed needs to be credible. Without a robust and effective methodology framework, independence checks, and accountability framework, third-party reviewers, certifiers, and assurance providers could undermine the entire green bond framework. Weak verification also diminishes enforcement efforts due to the reliance on sound evidence to substantiate misuse, misalignment, or misleading sustainability claims by regulators and investors.

This lacuna in enforceability is addressed in the dissertation by suggesting a hybrid model of green bond accountability, which is based on a framework of accountability established by 2 

SEBI. In this model, SEBI needs to continue to be the principal regulator, as green bonds are securities. SEBI should have a regulatory role in issuance, disclosure, appointment of reviewers, continuing reporting and enforcement of violations in markets. The framework should be supported in the following ways by NFRA: via improvement of sustainability assurance quality, professional discipline and methodological reliability. RBI should continue to act as a prudential regulator for banks and financial institutions regulated in the field of green finance. 

This dissertation concludes that the future of the green bond market in India is not just about increasing climate capital but developing legal trust. The green label cannot continue to be a declaration of intent, but a statement of action that is both credible and verifiable and implementable. This is only the time when green bonds can transition from being good financial products to green accountability instruments.


To access the full article, please click on the link - GREEN WITHOUT GUARANTEES STRUCTURAL ACCOUNTABILITY AND THE ENFORCEABILITY GAP IN INDIAS GREEN BOND REGIME.pdf