India is moving fast towards a greener and more sustainable future. To encourage environmental protection in a systematic and measurable way, the Government of India introduced the Green Credit Programme under the Green Credit Rules, 2023. Recently, the Ministry of Environment, Forest and Climate Change (MoEFCC) has notified a new methodology for calculating Green Credits from tree plantation activities (vide G.S.R. 592(E), superseding the earlier S.O. 884(E), dated 22nd February 2024).

This blog explains the notification in simple words so that industries, companies, students, and environment-conscious citizens can easily understand how Green Credit works, why it is important, and how it will be implemented.

Environment Notifications

Green Credit Rule 2023

What is Green Credit?

It is like an eco-friendly currency. When an individual, company, or organisation carries out specific activities that help the environment—such as tree plantation, water conservation, waste management, etc.—they earn “Green Credits”.

These credits act as a reward system for positive environmental actions. Later, they can be used for:

• Compliance with laws (such as compensatory afforestation),
• Meeting Corporate Social Responsibility (CSR) obligations,
• Reporting under Environmental, Social, and Governance (ESG) indicators.

Simply put, Tree plantation credit scheme gives value to environmental actions and encourages people to invest in nature.

Why Tree Plantation is Important in Forest restoration credit

Among all activities, tree plantation and forest restoration play a crucial role because:

• Trees absorb carbon dioxide and release oxygen.
• They improve soil fertility and water recharge.
• Forests provide habitat for biodiversity.
• Tree cover reduces air pollution and regulates temperature.

Hence, MoEFCC has designed a detailed methodology to calculate Green Credits from tree plantation to ensure that restoration efforts are genuine, measurable, and impactful.

The New Methodology for Tree Plantation (G.S.R. 592(E))

The government has now introduced a revised methodology for calculating Green Credits in respect of tree plantation on degraded forest land. Let’s break it down step by step:

1. Minimum 5 Years of Restoration Work

• Restoration work must continue for at least five years.
• Only after this period, and once the forest land reaches a minimum canopy density of 40%, the applicant can claim Green Credits.
• This ensures that only healthy, long-term plantations are rewarded—not short-term or failed projects.

2. Claim Report Submission

• The applicant (company/organisation) must submit a claim report in the prescribed format.
• A verification fee has to be paid to the Administrator (MoEFCC-appointed body).

3. Calculation of Tree plantation credit scheme

• Credits are calculated based on:
  • Vegetation status,
  • Increase in canopy density,
  • Number of surviving trees.
• One Tree plantation credit scheme is awarded for each new tree that survives for more than 5 years.

4. Verification and Approval

• Independent agencies designated by MoEFCC will verify the restoration activity.
• After evaluation, Green Credits will be issued to the applicant.

5. Transferability of Credits

• Green Credits generated from compensatory afforestation or tree plantation will be non-tradable and non-transferable, except between a holding company and its subsidiaries.

6. Old Projects Will Follow Earlier Rules

• For cases where applicants have already deposited payment under earlier notification S.O. 884(E), their projects will continue under old modalities.

7. Permitted Uses of Green Credits

Green Credits can be used once, for the following purposes:
a) Compensatory Afforestation: When forest land is diverted for non-forest use (as per Forest Conservation Act, 1980).
b) Corporate Social Responsibility (CSR): Companies can use Green Credits to show investment in environmental restoration.
c) Legal Project Approvals: To fulfil conditions where tree plantation is mandatory for project clearance.

8. Extinguishment of Used Credits

• Once Green Credits are used for any of the above purposes, they are extinguished and cannot be reused.

9. Reporting Under ESG

• Credits can be used for ESG (Environmental, Social, Governance) reporting, which is increasingly becoming a requirement for companies to showcase sustainability performance.

10. Implementation Modalities

• MoEFCC will issue further guidelines and modalities from time to time.

Benefits of the New Methodology

1. Scientific and Transparent – Credits are linked to survival rate, canopy density, and long-term results.
2. Encourages Genuine Plantation – Only plantations that survive beyond 5 years get rewarded.
3. Supports Compensatory Afforestation – Industries can meet legal requirements through verified credits.
4. Boosts ESG & CSR – Companies can improve their green image and sustainability reporting.
5. Promotes Green Economy – By linking environmental actions with measurable credits, India is moving towards a nature-positive economy.

How Companies and Organisations Can Benefit

• Industries: Can meet afforestation obligations while ensuring long-term sustainability.
• Corporate Sector: Can fulfil CSR requirements and boost ESG ratings.
• Investors & Stakeholders: Will have more confidence in companies genuinely working towards sustainability.
• Society at Large: Gains from increased forest cover, biodiversity, and cleaner environment.

Challenges Ahead

While the scheme is promising, a few practical challenges may arise:

1. Survival Rate of Trees – Planting is easy, but ensuring survival for 5+ years is difficult due to droughts, grazing, or poor maintenance.

2. Monitoring and Verification – The programme relies on designated agencies to verify results. Strong transparency and use of digital tools like satellite monitoring will be critical.

3. Awareness Gap – Many companies, especially smaller ones, are not fully aware of how to apply for credits, claim benefits, or integrate them with CSR/ESG.

4. Initial Cost Factor – Plantation and restoration require upfront investment, and companies may hesitate without understanding long-term advantages.

These challenges highlight the need for capacity building, training, and digital tracking systems to ensure that Green Credit delivers the intended environmental impact.

Future Scope of Green Credit in India

The Green Credit system is still in its early phase but has huge potential:

• Integration with Carbon Markets: In the future, certain categories of Green Credit may be aligned with international carbon markets, giving Indian companies a competitive edge.

• Expansion Beyond Trees: MoEFCC may include credits for water conservation, wetlands restoration, waste management, and energy efficiency, making it a multi-dimensional sustainability tool.

• Public Participation: Local communities, NGOs, and even individuals could be included in structured programmes, creating a nationwide green movement.

• Global Recognition: If implemented well, India’s Green Credit model can become an international benchmark for balancing economic growth with ecological protection.

This future-ready framework will not only support India’s Net Zero 2070 target but also strengthen its role as a leader in climate action.

FAQs on Green Credit

1. Who can apply for Green Credit?
Any registered company, organisation, or entity involved in approved environmental activities (such as tree plantation) can apply. Individuals may not directly claim credits unless working under an organised programme.

2. Is Green Credit the same as CSR spending?
Not exactly. CSR spending is a financial contribution towards social and environmental goals. Green Credit, on the other hand, is a measurable unit earned for environmental action. However, companies can use Green Credits to show CSR compliance.

3. Can Green Credits be traded like Carbon Credits?
No. Green Credits generated from tree plantation are non-tradable and non-transferable, except within a company and its subsidiaries. This ensures genuine usage for environmental compliance rather than profit-making trades.

Conclusion

The new notification G.S.R. 592(E) under the Green Credit Rules, 2023 provides a clear and robust methodology for calculating Green Credits from tree plantation. By making survival, canopy density, and long-term restoration the key criteria, the government ensures that only real and impactful environmental actions are rewarded.

This step is a strong move towards a sustainable and green economy, encouraging industries and organisations to invest in nature, while also benefiting from compliance, CSR, and ESG obligations.