Description

SEBI revises norms for appointing independent third-party reviewers/certifiers for green debt securities to align with requirements for social bonds, sustainability bonds, and sustainability-linked bonds under the ESG Debt Securities framework.

Summary

SEBI has revised the norms for appointment of an independent third-party reviewer/certifier for green debt securities vide circular HO/17/11/24(1)2026-DDHS-POD1/I/5967/2026 dated February 27, 2026. The revisions modify Chapter IX of the NCS Master Circular to align green debt security requirements with those already prescribed for social bonds, sustainability bonds, and sustainability-linked bonds under the June 05, 2025 circular on ESG Debt Securities.

Key Points

  • Paragraph 1.8 of Chapter IX of the NCS Master Circular is deleted and replaced by a new Paragraph 5 covering independent third-party reviewer/certifier requirements.
  • The new framework consolidates reviewer/certifier norms across all ESG Debt Securities (green, social, sustainability, and sustainability-linked bonds).
  • The reviewer must be independent of the issuer, its directors, senior management, and key managerial personnel.
  • The reviewer must be remunerated in a manner that prevents conflicts of interest.
  • The reviewer must have expertise in assessing ESG debt securities.
  • The scope of reviews conducted must be disclosed in the offer document.
  • This circular applies to all issuers who have listed or propose to list green debt securities, recognized stock exchanges, depositories, merchant bankers, debenture trustees, credit rating agencies, and ESG ratings providers.

Regulatory Changes

  • Deletion: Paragraph 1.8 of Chapter IX of the NCS Master Circular (prior norms for third-party reviewer for green debt securities) is deleted.
  • Insertion: A new Paragraph 5 titled “Independent third-party reviewer/certifier” is inserted into Chapter IX of the NCS Master Circular.
  • The new paragraph (5.1–5.3) prescribes conditions for independence, remuneration, and expertise of the reviewer, and mandates disclosure of review scope in the offer document.
  • Background: SEBI’s December 11, 2024 amendment expanded sustainable finance scope to include social bonds, sustainability bonds, and sustainability-linked bonds under the umbrella term “ESG Debt Securities”. The June 05, 2025 circular then specified the operational framework for these instruments. The current circular now harmonizes green debt security reviewer norms with that framework.

Compliance Requirements

  • Issuers of green debt securities: Must appoint an independent third-party reviewer/certifier meeting the new conditions (independence, conflict-free remuneration, ESG expertise) and disclose the scope of review in the offer document.
  • Merchant Bankers: Ensure offer documents reflect the updated reviewer/certifier disclosure requirements.
  • Debenture Trustees & Credit Rating Agencies: Be aware of revised norms when providing services related to green debt securities.
  • ESG Ratings Providers: Align service offerings with updated reviewer qualification criteria.
  • Recognized Stock Exchanges & Depositories: Take note of revised listing/disclosure norms for green debt securities.

Important Dates

  • Circular Date: February 27, 2026
  • Reference – Original Green Debt Circular: February 06, 2023 (SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/023)
  • Reference – NCS Master Circular: October 15, 2025 (SEBI/HO/DDHS/DDHS-PoD/P/CIR/2025/0000000137)
  • Reference – ESG Debt Securities Framework Circular: June 05, 2025
  • Reference – SEBI Amendment Notification: December 11, 2024 (expanding ESG Debt Securities scope)

Impact Assessment

This circular has a moderate compliance impact on entities involved in the issuance and listing of green debt securities. It does not introduce entirely new obligations but harmonizes existing requirements across the broader ESG debt securities ecosystem. Issuers and intermediaries already complying with the June 2025 ESG framework will find the updated norms familiar. The key practical change is the deletion of the old Paragraph 1.8 and substitution with a more detailed and structured Paragraph 5, which explicitly codifies independence, remuneration, and expertise requirements for third-party reviewers. There is no direct impact on equity markets or trading operations.

Impact Justification

Regulatory update aligning green debt security reviewer norms with broader ESG debt framework; affects issuers of listed green debt securities, merchant bankers, debenture trustees, and ESG ratings providers but does not impact equity markets or general trading operations.