Kathmandu. KATHMANDU: The Securities Board of Nepal (SEBON) is set to prepare a framework and directive on environmental, social and governance (ESG) for listed companies.

The Securities Board of Nepal (SEBON) has stated in its policy and program for the current fiscal year that it will prepare a framework and guidelines related to ESG. According to Sebon, an ESG reporting framework that includes environmental reporting, social impact reporting, governance indicators and climate risk disclosures will be developed to promote sustainable development.

A framework is being prepared to enhance the confidence of the international investors and orient the capital market towards green and sustainable finance. This is Sebon’s policy of orienting the capital markets towards green and sustainable finance.

Likewise, SEBON has decided to focus on the issuance and operation of green bonds and sustainable finance funds in the current fiscal year. It plans to issue green bond guidelines for the development of tools such as green bonds and sustainable finance, build a climate finance framework, prioritize ESG-based projects, link capital markets with carbon credit financing, and attract international green funds.

Nepal has the policy to provide sources of finance for hydropower, renewable energy, climate change adaptation and green infrastructure projects. According to Sebon, it will operate exchange-traded funds (ETFs) in the current fiscal year.

SEBON will conduct a study on the operation of NEPSE Index ETF, Banking ETF, Hydropower ETF, Government Bond ETF and ESG ETF. It will provide an opportunity for small investors to diversify at a low cost. Sebon expects this to increase the liquidity of the market and institutional investment.

Internationally, the nature of the capital market is changing rapidly. Artificial intelligence, blockchain, big data, cloud computing, and digital infrastructure are making global capital markets more transparent, secure, and efficient. Debates around sustainable finance, green bonds, social bonds, ESG-based investing, fintech, and digital assets are changing the face of the financial sector. “Nepal needs to gradually modernize, compete and credible its capital markets in sync with international practices and trends,” the statement said.

SEBON’s policy is to promote international practices on sustainable development, environmental responsibility, social responsibility and good governance (ESG) in a phased manner. Largely-listed companies will be encouraged to publish reports on sustainability, climate risk, energy efficiency, social responsibility and good governance. This will help to increase the confidence of international investors.

The listed companies will be encouraged to gradually adopt environmental, social and good governance (ESG) standards. The policy aims to institutionalize the dissemination of information related to environmental impact, carbon emission management, energy efficiency, social responsibility, labour practices, gender equality and good governance of companies in a phased manner.

The policy states that necessary preparations will be made to implement the sustainability report in a phased manner in line with the international standards.

SEBON’s policies and programs have stated that Nepal’s progress in international cooperation agreements, participation of FIIs, implementation of international standards, number of companies adopting ESG reports and international evaluation of capital markets will be monitored as long-term indicators.