PFRDA to Invest in Sovereign Green Bonds (SGBs)

The Pension Fund Regulatory and Development Authority (PFRDA) in India has approved the inclusion of Sovereign green bonds (SGBs) in pension funds. These government-issued bonds will be utilized to finance projects aimed at environmental initiatives.

Sovereign Green Bonds (SGBs): A Catalyst for Sustainable Development and Responsible Investing in India

The Significance of PFRDA’s Investment in Sovereign Green Bonds:

Promoting Sustainable Projects: By allowing pension funds to invest in SGBs, there is a direct channelling of funds into environmentally beneficial projects, contributing to the country’s sustainable development goals.

Greening Pension Portfolios: Allowing pension funds to include SGBs diversifies their investment portfolios and aligns with the growing demand for socially responsible investments.

Government’s Environmental Commitment: Issuing SGBs reflects the government’s commitment to addressing environmental challenges and promoting a greener economy.

Enhancing Awareness of Sustainable Investing: The inclusion of sovereign green bonds in pension funds can increase awareness among retail investors about sustainable investing. This, in turn, promotes a more knowledgeable and socially responsible approach to making financial decisions.

What are Sovereign green bonds?

Green Bonds, also known as Sovereign Green Bonds (SGrBs), are government-issued bonds intended to finance environment-related projects. These bonds offer investors a chance to earn sovereign-guaranteed returns and are dedicated to funding green initiatives.

Sovereign Green Bonds are issued by governments to raise funds for projects focused on the environment and climate. Green bond is a debt security that is issued to raise money for initiatives that are relevant to the environment or the climate.

The Pension Fund Regulatory and Development Authority (PFRDA) and the National Pension System (NPS) in India

The Pension Fund Regulatory and Development Authority (PFRDA) is responsible for overseeing and regulating pensions in India. Established in 2003 under the Ministry of Finance, its primary objective is to promote old age income security and protect the interests of National Pension System (NPS) subscribers.

The National Pension System (NPS) in India is a defined-contribution pension system regulated by PFRDA. It was created under the provisions of the Indian Trusts Act of 1882 to manage the assets and funds of this scheme in the best interest of the subscribers.