In a world where economic growth must increasingly align with environmental responsibility, Green Credits are emerging as a compelling mechanism for both businesses and governments. As climate challenges mount and global regulations tighten, Green Credits provide a practical, performance-based framework for aligning development objectives with ecological outcomes. Their rising significance marks a shift from traditional environmental narratives to measurable and market-driven sustainability actions.

Understanding Green Credits in India

As a step aligned with India’s LiFE (Lifestyle for Environment) movement promoting sustainable living, Green Credit Programme (GCP) was launched at COP28 in Dubai by Prime Minister Narendra Modi and UAE President Sheikh Mohammed bin Zayed Al Nahyan, is a landmark initiative in the field of environmental sustainability and forms a core component of India's broader strategy to achieve net-zero emissions by 2070.

Green Credits are a novel, tradable instrument introduced under India’s Green Credit Programme (GCP), offering a fresh approach to incentivizing environmentally positive actions. Unlike traditional carbon credits, which focus primarily on reducing greenhouse gas emissions, Green Credits adopt a broader scope — rewarding a diverse range of verified environmental activities such as afforestation, water conservation, sustainable agriculture, and waste management.

Administered by the Ministry of Environment, Forest and Climate Change (MoEFCC), the Green Credit Rules were officially notified in October 2023. This laid the foundation for a market-based framework where individuals, companies, and institutions can earn credits that are Auditable, Certifiable, and Tradable. These credits carry both financial incentives and reputational value, aligning environmental action with economic opportunity.

Unlike carbon credits, which focus specifically on emissions, Green Credits encompass a wider spectrum of activities, including:

i.  Tree plantation—to promote activities for increasing the green cover across the country

ii. Water management—to promote water conservation, water harvesting and water use efficiency or water savings, including treatment and reuse of wastewater

iii. Sustainable agriculture—to promote natural and regenerative agricultural practices and land restoration to improve productivity, soil health and nutritional value of food produced

iv. Waste management—to promote circularity, sustainable and improved practices for waste management, including collection, segregation, and environmentally sound management

v. Air pollution reduction—to promote measures for reducing air pollution and other pollution abatement activities

vi. Mangrove conservation and restoration—to promote measures for conservation and restoration of mangroves

vii. Eco mark label development—to encourage manufacturers to obtain eco mark label for their goods and services

viii. Sustainable building and infrastructure—to encourage the construction of sustainable buildings and other infrastructure using environment-friendly technologies and materials.

How India’s Green Credit Programme Works: A Step-by-Step Overview

The Green Credit Programme (GCP), overseen by the Ministry of Environment, Forest and Climate Change (MoEFCC), offers a structured, government-backed system for recognizing and monetizing verified environmental actions.

1. Registration of Activities Individuals or entities seeking Green Credits must register their environmental activities with the Indian Council of Forestry Research and Education (ICFRE) — the designated Administrator of the programme. Registration is done electronically via an official web portal established by the Central Government: https://moef.gov.in/\.

2. Verification & Credit Issuance  Upon receiving the application, the Administrator assigns a designated agency to verify and assess the submitted activity. This agency conducts an inquiry and submits a detailed verification report to the Administrator. Based on this report, the Administrator grants a certificate of Green Credit, which is then recorded in the national Green Credit Registry.

Key Features of Green Credit Programme

Some of the distinctive features that make Green Credits a transformative tool in India’s environmental policy landscape:

1) Tradability: Once issued, Green Credits are tradable on a forthcoming domestic trading platform, enabling market participation from corporates, financial institutions, and individuals. This tradability provides financial incentives for environmentally responsible behaviour and supports the creation of a green economy.

2) Beyond Carbon Markets: Unlike carbon credits, which focus strictly on reducing greenhouse gas (GHG) emissions, Green Credits recognize a wider spectrum of verifiable nature-positive actions, including afforestation, water conservation, biodiversity restoration, and sustainable farming practices.

3) Dual Credit Potential: Some eligible activities may simultaneously qualify for both Green and Carbon Credits, provided they generate overlapping environmental and climate benefits. This dual recognition enables diversified incentives and maximizes the impact of sustainability initiatives.

Therefore, proactive participation in the GCP not only reinforces environmental accountability but also strengthens ESG reporting, unlocks access to green finance, and positions organizations as credible contributors to India’s and the world’s sustainability goals.

Green Credits: A Global Trend Shaping ESG Investment

Globally, Green Credits are gaining traction. Denmark offers a strong example: the Danish pension fund P+ recently invested DKK 750 million (€100.6 million) in the Green Credit Fund I, launched by Copenhagen Infrastructure Partners (CIP). This Article 9-compliant fund under the EU Sustainable Finance Disclosure Regulation supports renewable energy projects worldwide. Denmark aims to channel at least 15% of its total pension assets into climate-aligned investments by 2030. As P+ CIO Kåre Hahn Michelsen observed, the fund seeks both financial returns and measurable climate impact—an approach increasingly relevant for ESG-conscious investors.

India Advances ESG Leadership with SEBI’s Green Credit Disclosures

India continues to lead from the front in environmental governance with its government-backed Green Credit Programme (GCP) — a forward-looking initiative that rewards individuals and organizations for verifiable eco-positive actions such as afforestation, water conservation, and sustainable infrastructure. By issuing tradable Green Credits linked to these actions, the GCP offers a market-based mechanism that aligns environmental stewardship with economic opportunity.

In a significant regulatory development, the Securities and Exchange Board of India (SEBI) has formally integrated Green Credit disclosures into the Business Responsibility and Sustainability Report (BRSR) under Principle 6 as the eighth leadership indicator, effective from FY 2024–25. This enables listed entities to voluntarily report:

- Green Credits generated or procured by the listed entity, and

- Green Credits generated or procured by their top ten value chain partners (based on purchase and sales value).

This move marks a pivotal shift in India’s ESG landscape — from intent-based disclosures to performance-based environmental metrics that are verifiable and measurable.

By embedding Green Credits within the formal ESG disclosure framework, SEBI is sending a clear signal: sustainability is not just a compliance issue, but a strategic lever for risk mitigation, market differentiation, and long-term value creation.

The integration of Green Credits enables Indian businesses to

1. Strengthen ESG narratives with credible, quantifiable environmental impact

2. Access green finance markets through verified sustainability performance

3. Enhance value chain transparency, supporting broader ecosystem accountability

4. Align with global ESG frameworks such as TCFD, GRI, and ISSB standards

As ESG standards and climate finance instruments converge globally, SEBI’s leadership — in sync with the national Green Credit Programme — positions India as a trailblazer among emerging economies in linking sustainability performance with financial and reputational outcomes.

Case Study: BAIF’s Early Adoption of Green Credits

One of the earliest movers in India’s Green Credit Programme is the BAIF (Bharatiya Agro Industries Foundation), a Pune-based non-profit/non-government Research Foundation known for its work in rural development and ecological sustainability. As reported by The Indian Express (Dec 8, 2023), BAIF is likely the first to officially register projects under the GCP.

BAIF’s Managing Director, Bharat Kakade, emphasized that Green Credits go beyond carbon offsets by rewarding diverse environmental actions such as water conservation, afforestation, and sustainable agriculture. “The benefit would go directly to the person involved in the act,” he noted, underscoring the programme’s inclusive and impact-driven structure.

BAIF contributed to shaping the GCP framework, especially in the area of water conservation, aligning national policy with field-level expertise. As the Green Credit Registry and trading infrastructure evolve, BAIF’s leadership offers a tangible example of how voluntary sustainability action can translate into measurable ESG gains.

Strategic Implications of Green Credits for Corporates

Green Credits are more than a compliance tool — they offer Indian businesses a strategic opportunity to strengthen ESG performance, engage their value chains, and unlock financial and reputational benefits.

i. Strengthen ESG Strategy

Green Credits provide verifiable data that can support climate disclosures and improve ESG scores. They help align with global frameworks like GRI, SASB, and SEBI’s BRSR by offering measurable environmental outcomes

ii. Engage the Value Chain

Companies can collaborate with suppliers on credit-generating activities like afforestation or water conservation. This supports Scope 3 tracking and helps smaller partners build sustainability capacity — enhancing overall ESG performance.

iii. Unlock Financial and Brand Value

Tradable Green Credits open access to green finance and improve eligibility for ESG-linked loans and investments. Participation also signals credible climate action — strengthening brand reputation in the eyes of investors, customers, and regulators.

The Green Credit Programme marks a pivotal step in India’s sustainability journey. By institutionalizing performance-based environmental actions and linking them to tangible economic incentives, it offers a practical blueprint for businesses to transition from intent to impact. As global trends show, Green Credits are more than a compliance tool—they are a strategic asset. For Indian corporates, this is a timely opportunity to lead with purpose, backed by measurable progress.

References:

https://baif.org.in/wp-content/uploads/2023/12/Indian-Green-Credit-Programme-and-BAIF-Indian-Express-8-12-23.pdf

https://energy.vikaspedia.in/viewcontent/energy/environment/life-mission/green-credit-program?lgn=en

https://blogs.isb.edu/bhartiinstitute/2023/08/31/emerald-reckoning-indias-journey-towards-a-green-credit-revolution/#:~:text=The%20prospect%20of%20receiving%20Green,involve%20treating%20and%20recycling%20wastewater