Green bond

A green bond is a fixed-income financial instruments (bond) which is used to fund projects that have positive environmental benefits.^[1]^[2] When referring to climate change mitigation projects they are also known as climate bonds. Green bonds follow the Green Bond Principles stated by the International Capital Market Association (ICMA), and the proceeds from the issuance of which are to be used for the pre-specified types of projects.^[3] The categories of eligible green projects include for example: Renewable energy, energy efficiency, pollution prevention and control, environmentally sustainable management of living natural resources and land use, terrestrial and aquatic biodiversity, clean transportation, climate change adaptation.^[3]^: 4

Like normal bonds, green bonds can be issued by governments, multi-national banks or corporations and the issuing organization repays the bond and any interest. The main difference is that the funds will be used only for positive climate change or environmental projects. This allows investors to target their environmental, social, and corporate governance (ESG) goals by investing in them. They are similar to Sustainability Bonds but sustainability bonds also need to have a positive social outcome.^[4]

The growth of bond markets provides increasing opportunities to finance the implementation of the Sustainable Development Goals (SDGs)^[5], Nationally Determined Contributions and other green growth projects. A UN conference held on the Sustainable Development Goals in 2021 emphasized the importance of sustainable bonds, and stated that of the approximately €300 trillion of financial assets on the markets, only 1% would be needed to achieve the SDGs.^[6]^[7]^[8]

^ "Explaining green bonds". 10 December 2014. Archived from the original on 2020-04-24. Retrieved 2020-04-14.
^ "Climate bonds Standard v2" (PDF). Archived (PDF) from the original on 2019-11-25. Retrieved 2020-04-14.
^ ^a ^b "Green Bond Principles". www.icmagroup.org. Archived from the original on 2020-05-30. Retrieved 2020-05-22.
^ "Green, Social and Sustainability Bonds". Archived from the original on 2020-04-21. Retrieved 2020-04-14.
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[1] "Explaining green bonds". 10 December 2014. Archived from the original on 2020-04-24. Retrieved 2020-04-14.

[2] "Climate bonds Standard v2" (PDF). Archived (PDF) from the original on 2019-11-25. Retrieved 2020-04-14.

[:3-3] "Green Bond Principles". www.icmagroup.org. Archived from the original on 2020-05-30. Retrieved 2020-05-22.

[4] "Green, Social and Sustainability Bonds". Archived from the original on 2020-04-21. Retrieved 2020-04-14.

[:6-5] Cite error: The named reference :6 was invoked but never defined (see the help page).

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