PFRDA Permits Pension Funds to Invest in Sovereign Green Bonds

• 21 Jul 2023

Recently, the Pension Fund Regulatory and Development Authority (PFRDA) announced that pension funds will be allowed to invest in sovereign green bonds (SGrBs).

Key Points:

• Timing of Issuance: The government is expected to issue sovereign green bonds in the second half of the current financial year.
• Implications for Retail Investors: The PFRDA's decision holds significant implications for retail investors, offering them an opportunity to align their pension contributions with their values and support environment-related projects.
• Definition of Sovereign Green Bonds: Sovereign Green Bonds, also known as Green Bonds, are government-issued bonds specifically used to fund environment-related projects.
• They offer sovereign-guaranteed returns and are dedicated to financing green initiatives.
• Benefits for Pension Funds: By including sovereign green bonds in their investment portfolios, pension funds can achieve greater diversification, spreading risk across various asset classes, and promoting sustainable investments aligned with environmental, social, and governance (ESG) principles.
• Promoting Sustainable Investments: With retail investors becoming increasingly conscious of the environmental impact of their investments, the option to invest in sovereign green bonds allows them to support projects that promote sustainability, renewable energy, and environmental protection.