Tata Cleantech Capital is issuing its inaugural sustainability-linked bond (SLB) as it strengthens its position as a leading green financier in India by taking on ambitious climate and sustainability targets.
The International Finance Corporation (IFC) is investing 3.75 billion rupees (US$45.60 million) in the new funding facility, which will help improve access to climate finance and drive India’s renewable energy capacity. The offering, announced on March 24, is the first such instrument issued by a private financial institution in India and will support the country's shift to a clean energy economy.
Tata Cleantech is a joint venture between Tata Capital and the IFC, and the company is working towards scaling up on-lending towards renewable energy projects and diversifying into energy efficiency and e-mobility sectors over the next three years.
SLBs are a rapidly growing capital market instrument, alongside green, social and sustainable (GSS) bonds, to support global sustainable development. The financing tool focuses on impact and measurable results, going beyond the “end-use” focused approach of GSS instruments and helping organizations improve performance against tailor-made environment, social and governance targets that also contribute to the United Nations Sustainable Development Goals.
The IFC’s innovative financing structure, says Tata Cleantech managing director Manish Chourasia, aligns with the company’s sustainability goals and will enable it to be a pioneer issuer of SLBs in India and strengthens its green financing portfolio. He adds: “The financing will also help diversify our borrowings’ profile in the fight against climate change.”
India, the IFC estimates, will need around US$403 billion in finance by 2030 to achieve its renewable targets, especially now that India has updated its nationally determined contributions, which aim to reduce the carbon intensity by more than 45% by 2030 from its 2005 levels.
Increasing climate financing, says Joon Young Park, the IFC’s South Asia portfolio manager for financial institutions, is key to supporting sustainable economic growth in India. “The IFC’s partnership with a long-term equity investee company and leader in climate finance is timely and will help promote resilient infrastructure and financial markets by catalyzing the issuance of India’s first SLB by a financial institution,” he explains. “In addition, the project will provide a much-needed boost deepening and broadening India’s debt capital markets, which is key to achieving sustainable and inclusive growth.”
Tata Cleantech is engaged in the business of providing finance and advisory services for projects in renewable energy, energy efficiency, waste management, water management and other cleantech sectors.