PT Sunrise Bumi Textiles is pleased to release its third Sustainability Report, for 2016-17. The report is prepared in consultation with RSM GC Advisory Services Pvt. Ltd.
PT. Indo Liberty Textiles (ILT) is pleased to release its 3rd sustainability report for 2016-17.
The report is developed in consultation with RSM GC Advisory Services, for the third consecutive year.
Price of Energy Saving Certificates from PAT cycle 1 shows no sign of stabilization. After 7th round of trading the EScert price seems to be on an eternal nosedive. Every trading session after the second trading session has been discovering new low.
The first trading session saw the clearing price of EScerts stand at Rs.1200 per EScert. After holding on to that price in the second weekly trading session, the clearing price fell to Rs1000 in the third session.
The clearing price of Rs.350 per EScert in the 7th trading session implies that the EScert price is now about 30% of the price discovered in first trading session. The weighted average price per EScert till date is about Rs.819.
The total volume of EScerts traded thus far is 1,88,590. Clearly there are many more EScerts to be purchased to cover shortfall of PAT cycle 1. However, the no of purchase bids has significantly declined in the most recent trading session. This could be due to
buyers holding back their purchase to leverage the declining price trend and reduce their compliance cost. With about one and half month to go before the time to comply through EScerts ends – how long buyers will withhold their buying decision is to be seen. And whether pushing purchase decisions to later trades leads to a demand spike pulling up the price is also a scenario that purchasers will factor in when deciding to trade.
The surplus savings which PAT has enabled works out to Rs0.03 per kwh as per the price discovered in the 7th and most recent trading session. So if one were to stand at the vantage point of the 7th trading session and look at energy savings which more capital intensive interventions can potentially unveil, then the upside provided by PAT’s flexible
market mechanism is a meagre 3 paise per kwh. This is perhaps not enough to swing an unacceptable payback period to within an acceptable time horizon. The evolution of per kwh contribution of EScert price, as shown above has not been encouraging to those looking at PAT as a mechanism for incentivizing voluntary ambitious energy efficiency improving interventions enabled by additional earnings through EScerts.
EScerts trading started with a wide divergence (16.69%) between the maximum purchase bids which could have been theoretically cleared if there was perfect buyer and seller alignment. That divergence has been progressively reducing till the first 4 trading
sessions. In the fourth trading session that divergence stood at only 0.10%. This is indicative of sellers reacting and quickly aligning their bids to catch the buyer in the face of the fact that supply of ESCerts was reported to be 2.7 times the ESCert demand. With divergence well below 0.5% in the recent trading sessions, the alignment reached at the 4th session seems to be prevailing for now.
So where is EScert price headed? Sellers are hoping that the EScert’s clearing price increases and the buyers are eagerly waiting for further fall in price – as we advance to the next weekly trade. One wonders whether at this EScert price there is more merit in banking than selling. Buyers see the price trend as an ever increasing possibility of complying at even lower cost. As the sellers and buyers try to consolidate their positions, it will be interesting to see how the EScert price fares.
Indo Phil Textiles Mills (IPT) is the largest textile mill in the Philippines.
IPT Inc. together with its subsidiaries Indo Phil Acrylic Manufacturing Corp. and Indo Phil Cotton Mills Inc. today has a production capacity of 21,576 TPA and 66,500 spindles with its own captive power plant of 24.8 MW.
This is IPT’s third successive sustainability report with RSM GC.
Vikram Woollens Sustainability Report 2016-17
Vikram Woollens (VW), a unit of Grasim Industries Ltd., was established
in 1995 and has its manufacturing unit at Malanpur in Bhind district,
Madhya Pradesh, India.
This is our third consecutive report with the company.
What is a Green Bond?
A green bond is a fixed-income financial instrument for raising capital through the debt market. The green bond raises funds for projects having environmental benefits based on what we define as ‘green’. Green bonds are usually sourced from pension funds, sovereign wealth funds and insurance companies. Green bonds are issued to serve three main objectives in the current market scenario which presents as a barrier to climate mitigation and adaptation activities:
- Reduce the cost of capital further
- Stimulate demand from institutional and retail investors
- Expand and diversify the issuers base.
Types of Green Bond and Applicability Condition Set by Climate Bond Standard
Climate Bonds Standard sets out the requirements that apply to specific types of bonds. Definitions for the Bond Types are provided in the Definitions section of the Climate Bonds Standard. The table below specifies which Requirements are applicable to each Bond Type. The applicable Requirements differ between Bond Types, and address specific risks related to each Bond Type.
|Bond Types||Applicable Requirements|
|Use of Proceeds Bond||· Project Holding
· Settlement Period
|Use of Proceeds Revenue Bond||· Project Holding
· Settlement Period
|Securitized Bond||· Project Holding
|Other Debt Instrument||· Project Holding
· Settlement Period
History of Green Bond in India
India is one of popular markets when it comes to issuance of Green Bonds. It featured in the 7th position in terms of issuances in 2016 with issuance of USD 2.7 billion, behind United States, France, China, Germany, Netherlands and Sweden. The history of green bond market in India is well briefed in the figure below.
The Securities and Exchange Board of India (SEBI) on 30th May, 2017 came out with a circular stating which is the project activities, for which a Debt Security will be called ‘Green’ or ‘Green Bond Security’. The activities are aligned to the Green Bond Principle. The following are the broad categories:-
L&T Infrastructure Finance became the 1st SEBI approved green bond-IFC invests in L&T Infrastructure Finance
Before the development of guidelines by SEBI Internationally recognized Climate Bond Standards lists down a two-step process to determine the eligibility of specific projects as contributors to ‘low carbon’ and climate resilient economy which is well defined in CBS Version 2.1 under clause 9 and clause 10 of the report.
But does the terminology ‘green’ vary?
Yes, the term green will vary with geography and with the functionality of the project activity. All projects that are under ‘green’ may not exhibit the properties of ‘green’ if end effects of such project are detrimental to the society. The Standards stated by SEBI provide for an elaborate list of sectors which would qualify to be eligible projects for Climate Bonds issuances and they are as follows:
|Energy||Low Carbon Buildings||Industry & Energy Intensive Commercial||Waste & Pollution Control|
• Wave and Tidal
• Energy distribution & management
• Dedicated transmission
• Products for building low carbon buildings
• Energy efficiency processes
• Energy efficiency products
• Retail and wholesale
• Data centers
• Process & fugitive emissions
• Energy efficient appliances
• Combined heat & power
|• Recycling facilities
• Recycled products & circular economy
• Waste to energy
• Methane management
|Information Technology & Communications||Nature Based Assets||Water|
• Mass transit
• Bus rapid transport
• Water-bourne transport
• Alternative fuel infrastructure
|• Power management
• Resource efficiency
|• Agriculture land
• Forests (managed and unmanaged)
• Degraded land
• Other land uses (managed and unmanaged)
• Fisheries and aquaculture
• Coastal infrastructure
|• Flood defenses
• Water distribution infrastructure
• Water capture & storage infrastructure
• Water treatment plants
• Assets in energy & production industries
Process of Issuance of Green Bonds
Issuance of Green Bonds in India will follow the existing SEBI regulations for issuance of corporate bonds as prescribed under ILDS Regulations. However, for describing a corporate bond as green bond, in addition to the compliance required under ILDS Regulations, the Green Bond Principles, 2015 will also have to be disclosed:
Over and above the SEBI guidelines the issuer will have to disclose the following points based on Green Bond Principles
- Use of proceeds: issuers to define and disclose their criteria for what is considered ‘green’ i.e. which projects, assets or activities will be considered ‘eligible’ and how much funds will be spent on.
- Project evaluation and selection: what process will be used to apply ‘green’ criteria to select specific projects or activities?
- Management of proceeds: what processes and controls are in place to ensure funds are used only for the specified ‘green’ projects?
- Reporting: how projects will be evaluated and progress reported, against both environmental and financing criteria.
Alternatively one can get green bonds internationally certified and get it subscribed by international agencies who can list it under foreign stock exchanges. The procedure to achieve such certification is through Climate Bond Standards.
The Climate Bonds Standard & Certification Scheme aims to provide the green bond market with the trust and assurance that it needs to achieve scale. Activating the mainstream debt capital markets to finance and refinance climate-aligned projects and assets is critical to achieving international climate goals, and robust labelling of green bonds is a key requirement for that mainstream participation.
The Climate Bonds Standard sets out clear criteria to verify certain green credentials of a bond or other debt instrument.
India has stated its’ INDC that suggests a requirement of atleast USD 2.5 trillion to finance climate change activities. Introduction of tax free infrastructure bonds amounting to INR 50 billion will help meet a target of 175 GW of renewable energy by 2022 which requires a funding of USD 200 billion. To make green bonds a success the guidelines stated by SEBI and CBS should be integrated to ensure project costs do not supersede the budgeted amount.
Jaya Shree Textiles Sustainability Report 2015-16
Grasim Bhiwani Textiles Ltd. Sustainability Report 2015-16
Vikram Woollens SR 2015-16
IPT Sustainability Report 2015-16