What Are Green Bonds and What Are Its Functions

Definition

 Green bonds are a type of fixed income securities that raise funds for environmentally-friendly projects, such as renewable energy, clean transportation, sustainable agriculture, and eco-friendly infrastructure.

The purpose of green bonds is to provide an alternative investment opportunity for individuals and organizations looking to align their investments with their environmental values and support the transition to a low-carbon economy.

Purpose

Issuance

Green bonds are issued by corporations, government agencies, and international organizations and can be sold to individual and institutional investors.

Eligibility Criteria 

The eligibility criteria for projects funded by green bonds are defined by the Green Bond Principles (GBP) established by the International Capital Market Association (ICMA).

Transparency

Green bonds are subject to enhanced transparency and disclosure requirements, including regular reporting on the use of proceeds, project impact, and environmental risk management.

Climate Impact 

Green bonds have a direct and measurable impact on reducing greenhouse gas emissions and combating climate change by financing low-carbon projects.

Green bonds can have a positive social impact, creating jobs and economic growth in sustainable industries, while also promoting social equity and environmental justice.

Social Impact