India's green equity criteria to include transition category
India's National Stock Exchange is preparing to launch green equity criteria that will be the first globally to offer a third colour category of "orange" for transition companies.
The NSE's proposed voluntary Green Equity Pathway is expected to launch before the end of the year with a green equity framework that will offer an orange classification for hard-to-abate industries, as well as more typical green and dark green categories.
"Our upcoming framework offers a three-tier classification ... reflecting India's transition economy and creating visibility, trust and comparability," said NSE CEO Ashishkumar Chauhan.
The colours orange and amber are increasingly being used to represent transition, although orange bonds and loans have previously been used by issuers to represent gender equality.
India is seeking to attract trillions of US dollars of investment to reach net-zero emissions. The country needs an estimated US$2.5trn or around US$167bn a year of investment from 2015 until 2030. That rises to US$4.5trn or US$250bn annually from 2030 to 2047 and US$4trn or US$174bn per year from 2047 to 2070, according to an NSE presentation.
Those figures are a long way from current deal activity. Last year, green sector companies raised US$3.13bn on NSE's mainboard, which is around 16% of total equity capital raised, and green SMEs mobilised US$115m.
Issuance of offshore and onshore ESG-labelled debt by Indian companies has slowed this year to just US$1.82bn, compared with US$4.39bn in 2024, according to LSEG data.
NSE already offers green, social and municipal bonds and social and development impact bonds as well as ESG indices and monthly electricity futures that enable hedging and risk management for renewable energy.
India's orange category will be reserved for companies that derive around 25% of revenues from green activities. The green category will be for firms with around 50% of revenues and the dark green category will reflect around 75%.
"The orange tier recognises hard-to-abate industries, including critical minerals that are vital to India's growth yet face structural decarbonisation challenges,“ said Harish Ahuja, head of sustainability, power and carbon markets, listing and social stock exchange at NSE.
The orange tier reflects a growing acceptance in the market of transition finance to fund decarbonisation. Global loan market associations launched a transition loan guide in mid-October that contains draft transition loan principles and the International Capital Market Association is poised to launch climate transition bond guidelines in early November.
Hard-to-abate companies make up 35% of India's industrial emissions and around 20% of the country's GDP. India still relies heavily on coal-fired power generation, which provides around 75% of the country's electricity.
The move by NSE is part of a broader adoption of green equity designations by other global exchanges, based on the World Federation of Exchanges' principles.
Nasdaq, Brazil’s B3 and the SIX Swiss Exchange offer green equity designations based on green equity principles. In addition, the London Stock Exchange provides the Green Economy Mark based on a data-driven method to identify green companies.
The Philippine Stock Exchange published draft guidelines in early 2025 and in October saw its first green-labelled IPO from Maynilad Water Services. The Indonesia Stock Exchange is developing a framework for its IGREEN concept for green equity and green equity transition.
“The appetite for launching green equity designations aligned with the WFE principles and guidance continues to grow," said WFE CEO Nandini Sukumar.