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International Finance Corporation (IFC) announced to invest Rs 3,750 million (about $50 million) in a sustainability-linked bond (SLB) issued by Tata Cleantech Capital.

The company is calling it the first such instrument issued by a private financial institution in India and says it will support the country’s shift to a clean energy economy.

With this, 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.

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

The SLB is a joint venture between Tata Capital Limited and IFC. It will help Tata Cleantech Capital Limited (TCCL) strengthen its position as a leading green financier by taking on ambitious climate and sustainability targets.

SLBs, a financing tool of the future, are a capital market instrument, alongside Green, Social, and Sustainable (GSS) bonds, to support global sustainable development. It focuses on impact and measurable results, going beyond the “end-use” focused approach of GSS instruments, and helping organisations improve performance against the tailor-made environment, social, and governance (ESG) targets that also contribute to the United Nations Global Goals.

According to Joon Young Park, IFC’s Portfolio Manager, Financial Institutions Group for South Asia, the partnership will help promote resilient infrastructure and financial markets by catalysing the issuance of India’s first sustainability-linked bond by a financial institution.

In addition, the project will provide a much-needed boost to deepening and broadening India’s debt capital markets, which are key to achieving sustainable and inclusive growth.

Moreover, IFC estimates the country will need around $403 billion in renewable finance by 2030 to achieve its renewable targets.