ADB has invested US$25 million in Vivriti Capital’s first climate bond for renewable energy and EV infrastructure. Smitha Jain Arora, Head – Sustainability & Impact, lays the road ahead:
Ravi Lalwani: What segments of energy producers and energy consumers does the company expect to generate business from for the funds from ADB?
Smitha Jain Arora: In alignment with the commitment to sustainable development, the proceeds from the green bond issuance are being utilized solely to finance climate projects in the electric vehicle, solar energy, wind energy and waste management segments in India. The funds allocated to suitable loans ensure that each project complies with applicable laws and sustainability criteria. At least 30% of the funds are directed towards projects in the electric vehicle sector, which includes financing for individuals purchasing new electric vehicles. Up to 30% of the funds are allocated to solar energy projects, supporting renewable energy development.
Additionally, the funds are allocated strictly to the specified sectors, aligning with the green bond’s purpose and will not be used for investments in real estate, land purchases, or capital markets (except for eligible projects).
What new evaluation capabilities has Vivriti Capital developed for assessing climate related financing?
Preparation of a Sustainable/Green Financing Framework was a necessity and a pre-requisite for the issuance of a green bond. With numerous iterations and additions to our earlier green financing framework, we have created the present ‘Sustainable Finance Framework’. The framework had to be revamped to be in alignment with various global guidelines – Climate Bonds Initiative (CBI) requirements for sectoral eligibility, climate mitigation and adaptation & resilience (A&R), Sustainability Bond Guidelines 2021, Green Bond Principles 2021, Green Loan Principles 2023, Social Bond Principles 2023 and Social Loan Principles 2023. It was followed by regular feedback and communication with our external verifier for the preparation of reports to be submitted to CBI.
What are Vivriti’s long-term business targets for climate finance?
Vivriti’s climate reporting roadmap is aligned with TCFD (Task Force on Climate-related Financial Disclosures) and was outlined in 2023-2024. We have a 3-4 year timeframe to chart out the roadmap. We have set short-term and long-term targets for ourselves in order to strengthen our climate commitments on an ongoing basis, to gradually align with the Paris threshold pathways of 1.5°C to 2°C and follow frameworks like the Science Based Targets initiative (SBTi).
Is this the first climate fund raised by Vivriti? If not, share details of past fund raising?
Yes, this is the first green bond raised by Vivriti. Over the past 2-3 years, we have been relentlessly strengthening our sustainability performance in alignment with global best practices, standards and stakeholder demands. While on this mission, through our stakeholder engagement and stewardship route, we have equally supported our portfolio companies in the Indian mid-market segment to improve their own sustainability performance. We abide by our statement on the same: ‘To build a circle of sustainable champions.’
The continuous refinement of our sustainability management practices has also led us to prioritize climate risks and opportunities. By raising funds via a green bond, we will be delving into capturing the enormous climate opportunity that this space holds, as we will be supporting climate mitigation solutions around solar/wind energy, clean transportation, and waste management. Additionally, by financing climate positive companies, we will be contributing to our portfolio level decarbonization and our organization’s progress towards phasing-down from carbon-intensive sectors.
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