Green Credits in India: SEBI’s New Guidelines and Emerging Opportunities in 2025

Why Are Green Credits Gaining Momentum in India?

Globally, governments are racing to meet net-zero goals — and market mechanisms like carbon credits and green finance instruments are no longer buzzwords, but strategic levers. In India, this sustainability shift has reached a new milestone with the formalization of green credits — a concept rooted in environmental restoration, community participation, and market-based incentives.

While the idea of rewarding positive environmental action isn’t new, 2024–2025 has seen a regulatory shift that could redefine how India quantifies and monetizes sustainability efforts. The Ministry of Environment, Forest and Climate Change (MoEFCC) has already laid the foundation through the Green Credit Programme (GCP). Now, with the Securities and Exchange Board of India (SEBI) stepping in to integrate green credits into financial and ESG disclosure frameworks, the idea is poised to scale — with implications across industries, investors, and corporate strategy.
But what exactly are green credits? How do they differ from carbon credits? And how does SEBI’s new framework change the game for Indian businesses?

This blog breaks down the evolving green credit landscape — exploring its definition, regulatory context, and what SEBI’s involvement means for companies, investors, and India’s broader sustainability ambitions.

What Are Green Credits — And How Are They Different from Carbon Credits?

Green credits are a regulatory and economic instrument designed to reward individuals, companies, or communities for undertaking verified environmental activities. These can include:

• Afforestation and reforestation
• Sustainable agriculture and soil restoration
• Waste management and circular economy projects
• Water resource conservation
• Urban greening and biodiversity initiatives

Unlike carbon credits, which are narrowly focused on reducing or offsetting greenhouse gas (GHG) emissions, green credits represent a broader set of environmental co-benefits. They’re designed not just to neutralize impact, but to generate positive outcomes — be it ecosystem regeneration, water savings, or land health improvements.

In simple terms:
Carbon credits reward you for reducing harm.
Green credits reward you for creating value — ecologically and socially.

India’s Green Credit Programme (GCP) — introduced by MoEFCC — formalizes this system, creating a structured way for environmental actions to be quantified, verified, and eventually monetized or traded. It’s a vision that aligns with India’s global commitments under the Paris Agreement, the SDGs, and the LiFE (Lifestyle for Environment) mission.

But for this system to scale — and for companies to account for green credits in sustainability disclosures — regulatory alignment is essential. That’s where SEBI comes in.

India’s Push for Green Credits: A Quick Timeline

India’s journey toward green credits hasn’t happened overnight. It’s the result of years of policy experimentation, climate diplomacy, and shifting market expectations. As global pressure to decarbonize mounts, India has responded with a layered approach — blending regulatory frameworks, voluntary schemes, and developmental goals.

Here’s how the evolution unfolded:

2015–2021: Laying the Climate Policy Foundation

• India commits to the Paris Agreement (2015), pledging to reduce emissions intensity of GDP and increase non-fossil fuel energy capacity.
• Initiatives like Perform, Achieve and Trade (PAT) and Renewable Energy Certificates (RECs) laid early groundwork for market-linked environmental incentives.
• Programs such as the National Mission for a Green India focused on afforestation and ecological restoration — precursors to green credit-linked actions.

2021–2022: Net-Zero Ambition and the LiFE Movement

• At COP26 (Glasgow), Prime Minister Modi announces India’s goal to reach net-zero by 2070.
• India launches LiFE – Lifestyle for Environment, promoting individual and institutional behavior change.
• MoEFCC begins exploring how to institutionalize voluntary environmental actions through quantifiable frameworks — setting the stage for green credits.

2023: Drafting the Green Credit Programme (GCP)

• In June 2023, the Ministry of Environment, Forest and Climate Change (MoEFCC) released the draft Green Credit Programme, inviting public and stakeholder feedback.
• The GCP proposes a framework to assign credits to verified environmental actions — across sectors such as afforestation, water conservation, and waste reduction.
• The program introduces the concept of “Green Credit Registry” and “Accredited Verifiers”, signaling serious intent to establish a credible marketplace.

2024–2025: SEBI Steps In — Linking Green Credits to Corporate Finance

• In 2024, the Securities and Exchange Board of India (SEBI) introduced revisions to ESG disclosure norms, including references to green credits.
• These developments aim to mainstream green credits within ESG frameworks, sustainability-linked instruments, and voluntary carbon markets.
• SEBI’s actions are in sync with MoEFCC’s push — representing the first time financial markets and environmental ministries have formally aligned on this agenda.

This trajectory reflects a key shift: environmental impact is no longer seen as CSR-driven or philanthropic — it’s becoming a regulated, reportable, and monetizable outcome.

SEBI’s New Guidelines on Green Credits (2024–2025): What Changed and Why It Matters

In a pivotal move for India’s sustainable finance ecosystem, the Securities and Exchange Board of India (SEBI) introduced significant updates in late 2024 that directly acknowledge and support the integration of green credits into corporate sustainability frameworks.

But why is SEBI’s involvement so significant?

The ESG Puzzle: Where Green Credits Fit In

SEBI already mandates top-listed entities to disclose ESG-related metrics through the Business Responsibility and Sustainability Report (BRSR). However, until now, there was no standardized mechanism for companies to report or monetize positive environmental actions beyond emissions reduction.

The Green Credit Programme, being a government initiative, created the supply side — a way to earn credits. But the demand side — who would use these credits, and how they would be reported or traded — remained undefined.

That gap is what SEBI is closing.

What SEBI’s New Guidelines Include:

1. Inclusion of Green Credits in ESG Reporting:

   • Companies may now report green credit generation as part of their BRSR Core or extended ESG disclosures.

   • This enhances transparency and helps investors understand not just carbon reduction efforts, but broader ecological contributions.

2. Recognition of Green Credits in Sustainable Finance Instruments:

   • SEBI is evaluating how green credits can be linked to green bonds, ESG funds, or sustainability-linked loans.

   • This opens the door for financial innovation, where credit-generating activities could lower capital costs or unlock investor incentives.

3. Alignment with Carbon Markets:

   • While carbon credits are currently being structured under a separate voluntary market, SEBI’s guidance suggests an intent to harmonize green and carbon credit reporting, ensuring companies avoid double-counting or greenwashing.

4. Corporate Governance Implications:

   • SEBI emphasizes traceability, third-party verification, and auditability, echoing the MoEFCC’s language on accredited verifiers and registries.

   • This elevates green credits from a sustainability initiative to a board-level compliance and risk-management concern.

Why This Matters:

• For Companies: Clearer pathways to integrate green impact into ESG ratings and investor communications.
• For Investors: Improved access to verifiable, high-quality data on environmental performance beyond emissions.
• For the Market: A step closer to building India’s own environmental credit exchange, bridging the GCP with financial instruments.

Green Credits vs. Carbon Credits: What’s the Difference, Really?

How Can Businesses in India Start Earning Green Credits?

If you're a company operating in India, especially in sectors like manufacturing, real estate, agriculture, infrastructure, or logistics, you may be closer to generating green credits than you think.

Under the draft Green Credit Programme, several types of activities are eligible to earn credits. These include:

• Tree planting or afforestation on degraded land
• Restoring natural water bodies or improving groundwater recharge
• Implementing sustainable farming practices that reduce chemical use and protect soil
• Setting up decentralized waste management systems
• Energy efficiency upgrades in buildings or operations
• Urban greening projects like green roofs, vertical gardens, or native landscaping

But the key to earning green credits isn’t just doing these things — it’s doing them in a verified, traceable, and standardized way.

Here’s how the process is expected to work, based on the government’s framework:

• Register the Project: You’ll need to register your activity through the official Green Credit Programme platform, providing baseline data and detailed plans.
• Get It Verified: An accredited third-party agency will verify that your activity meets the eligibility criteria and has achieved real, measurable environmental impact.
• Receive the Credits: Once verified, your credits will be issued and recorded in a national registry. These can then be retained, reported (especially in ESG disclosures), or eventually traded — depending on how the market evolves.
• Report Transparently: If you're a listed company or large private enterprise, SEBI’s updated ESG disclosure norms will likely expect you to report these actions clearly, ideally backed by third-party verification and impact metrics.

This process isn’t just bureaucratic red tape — it’s about building trust in the system. For green credits to have real value, they must be credible, measurable, and aligned with national environmental priorities.

For businesses, this also means an opportunity to stand out — not just through ESG scores or investor ratings, but by being early movers in a system that’s quickly gaining traction.

Why Green Credits Matter for India’s Sustainability Goals

India’s environmental challenges are uniquely complex. We’re home to over a billion people, with growing energy demands, rapid urbanization, and climate vulnerabilities that range from rising temperatures to erratic monsoons and groundwater depletion. At the same time, India has made strong global climate commitments — including net-zero by 2070 and ambitious targets under the Paris Agreement.
Green credits offer a solution that goes beyond emissions and speaks to the country’s wider ecological and social needs.

By incentivizing actions like afforestation, water conservation, sustainable farming, and waste management, green credits can:

• Support rural livelihoods and promote community-driven climate action
• Restore degraded ecosystems and improve biodiversity
• Reduce local pollution and enhance urban quality of life
• Complement climate mitigation with equally important adaptation measures

This broader impact is what makes green credits so important. They’re not just a new compliance mechanism — they’re a bridge between economic growth and ecological restoration. In a country like India, where environmental well-being is deeply intertwined with public health, food security, and social equity, that bridge is essential.
And unlike global carbon markets, which have often been dominated by large international players, India’s green credit system is designed to be more inclusive — allowing individuals, small businesses, and local authorities to participate in environmental restoration and benefit from it economically.

Challenges and Limitations: What’s Standing in the Way?

While the Green Credit Programme presents a promising leap toward sustainability, it's not without its growing pains. Like any emerging system, several roadblocks could slow adoption or create confusion — especially in the early stages of implementation.

• Lack of Verification Infrastructure:
  One of the biggest hurdles is the availability of credible, accredited verification bodies. Without a strong network of third-party verifiers trained in environmental impact assessment, the entire system could face bottlenecks — delaying credit issuance or reducing trust in the quality of credits.
• Measurement and Data Challenges:
  Quantifying the impact of green activities (like biodiversity restoration or water conservation) is complex. Many organizations may not yet have the tools, data systems, or expertise to generate the kind of verifiable evidence required. This can discourage participation or result in weak documentation.
• Confusion with Carbon Markets:
  Because green credits are new — and somewhat similar in name to carbon credits — there’s a risk of misunderstanding. Businesses may incorrectly assume they’re interchangeable, or conflate eligibility criteria. This could lead to compliance issues or misreporting in ESG disclosures.
• Limited Awareness Among Stakeholders:
  Many potential participants — especially SMEs and decentralized government bodies — are still unaware that green credits exist, or that they could benefit from them. Without targeted outreach, capacity building, and clarity from regulators, uptake will remain slow.
• Evolving Regulatory and Technical Frameworks:
  The Green Credit Programme is still in development. As the rules are refined, businesses may find themselves needing to adapt processes midway. That uncertainty could make some hesitant to act now, especially if they’ve been burned by past experiences in volatile voluntary carbon markets.

The Road Ahead: What to Watch in 2025 and Beyond

As we look ahead, green credits in India are poised for rapid evolution. Several key developments are worth tracking:

1. Finalization of the Green Credit Registry and Verification Guidelines
The Ministry of Environment is expected to release detailed procedures on how credits will be validated, issued, and managed — including digital tracking, third-party audits, and credit retirement protocols.

2. Integration with Financial Markets
With SEBI’s involvement, green credits may soon be recognized in ESG indices, green bonds, and even corporate performance-linked pay. This could open the door for institutional investors to value companies not just on profitability, but on regenerative environmental impact.

3. Interoperability with Carbon Markets
There is growing interest in aligning green credits with India’s voluntary carbon market. While the two systems are distinct, their eventual coordination could create a unified environmental credit market — improving liquidity, price discovery, and market confidence.

4. Expansion of Eligible Activities
Future iterations of the programme may include more complex or high-impact actions — such as carbon farming, blue carbon (coastal ecosystems), or urban cooling interventions.

This is just the beginning. What’s clear is that the government is serious about mainstreaming ecological value creation — and it’s creating a policy and market framework that encourages businesses to join in.

Conclusion: Why Businesses Should Act Now

Green credits may be new, but they’re not a passing trend. They represent a shift in how India — and increasingly, the world — values nature, measures sustainability, and builds climate resilience.

For businesses, this is more than a regulatory checkbox. It’s a strategic opportunity to:

• Lead in a growing green economy
• Strengthen ESG credibility with investors and regulators
• Reduce long-term environmental risks across operations and supply chains
• Create real, measurable impact — for people, for nature, and for the future

Those who act early will shape the standards, earn trust, and unlock new sources of value.So whether you're a sustainability officer, a compliance lead, a project developer, or an investor, now is the time to engage. Understand the Green Credit Programme. Map your organization’s potential. And be part of building a future where environmental action is not just expected — but rewarded.