International Finance Corporation (IFC), a member of the World Bank Group, will invest ₹3.75 billion (~$46 million) through sustainability-linked bonds (SLB) issued by Tata Cleantech Capital.

The investment will help Tata Cleantech Capital advance as a green financer while supporting its climate and sustainability targets.

The company will work towards scaling up on-lending towards renewable energy projects and diversifying into energy efficiency and e-mobility sectors over the next three years.

IFC said that it was the first such instrument issued by a private financial institution in India, and the sustainability-linked bond will support the country’s transition to a clean energy economy.

Tata Cleantech Capital is a joint venture between Tata Capital and IFC. It is engaged in the business of providing finance and advisory services for projects in renewable energy, energy efficiency, waste management, water management, and other cleantech sectors.

Managing Director of Tata Cleantech Capital Manish Chourasia said, “Aligning with our sustainability goals, IFC’s innovative financing structure will enable us to be a pioneer issuer of an SLB in India and strengthen our green financing portfolio. Also, the financing will help diversify our borrowings’ profile in the fight against climate change.”

According to IFC, India will require around $403 billion in financing by 2030 to achieve its renewable energy goals, including mitigating carbon emissions by more than 45%.

IFC’s Portfolio Manager, Financial Institutions Group for South Asia Joon Young Park, said, “IFC’s partnership with a long-term equity investee company and leader in climate finance is timely and will help promote resilient infrastructure and financial markets by catalyzing the issuance of India’s first sustainability-linked bond by a financial institution. In addition, the project will provide a much-needed boost deepening and broadening India’s debt capital markets, key to achieving sustainable and inclusive growth.”

IFC said that sustainability-linked bonds are a rapidly growing capital market instrument, alongside green, social, and sustainable (GSS) bonds.

It added that such bonds help organizations improve performance against the tailor-made environmental, social, and governance targets contributing to the United Nations’ Global Goals.

Earlier this month, IFC announced an investment of ₹6 billion (~$72.9 million) in a subsidiary of Mahindra & Mahindra to expand the reach of affordable electric three-wheelers and small commercial vehicles.

In December 2022, IFC announced loans of $400 million and $33.8 million to HDFC and HomeFirst, respectively to improve access to climate-smart affordable homes in India.