Green Issues: Green Bond proceeds finance positive environmental projects

Green bonds are debt instruments that differ from conventional fixed-income securities only in that the issuer pledges to use the proceeds to finance projects that are meant to have positive environmental or climate effects. Since its debut in 2007, the green bond market has been growing steadfastly.

According to the Climate Bond Initiative, 2020, new issues have reached $257 billion globally in 2019, up from $142 billion in 2018 and ₹28 billion in 2014. While the overall size of the green segment is still tiny in comparison to the funds raised with conventional bonds, there is massive potential for further market growth as environmental issues are rising high on the policy agenda.

For instance, Europe alone is estimated to need about ₹180 billion of additional investment a year to achieve the targets set for 2030 in the context of the 2015 Paris Agreement on climate change, including a 40% cut in greenhouse gas emissions. The growing interest of public policy towards green bonds has indeed already materialised into a number of initiatives to encourage market participants, on both the demand and the supply side.


Direct subsidies or grant schemes, such as the Sustainable Bond Grant in Singapore, are in place to support eligible issuers in covering the additional costs associated with external review for the green securities. Likewise, several jurisdictions worldwide, including China and Hong Kong, have issued regulations in order to enhance transparency and disclosure on the green bond market, which is instrumental in aligning investors' incentives.

From "Green Bonds as a Tool Against Climate Change"