Overview

GREEN BONDS: Green bonds are financial instruments that are specifically designed to fund environmentally friendly projects. They are similar to traditional bonds, but the proceeds raised from green bonds are exclusively allocated to finance projects that have positive environmental benefits. The main objective of green bonds is to support sustainable development and the transition to a low-carbon economy. The projects funded by green bonds can include renewable energy projects (such as wind farms or solar power installations), energy efficiency initiatives, sustainable agriculture, waste management, clean transportation, and other environmentally friendly projects. Green bonds are typically issued by governments, municipalities, corporations, and other organizations seeking to finance their green projects. They are attractive to investors who want to support environmentally responsible initiatives while earning a financial return. To ensure transparency and accountability, green bonds are subject to specific guidelines and frameworks. The International Capital Market Association (ICMA) has developed the Green Bond Principles (GBP), a set of voluntary guidelines that provide issuers with best practices for issuing green bonds. The GBP covers areas such as project evaluation and selection, management of proceeds, reporting, and verification. Investors in green bonds benefit from the potential financial returns associated with bond investments while also supporting projects that contribute to environmental sustainability. The market for green bonds has been growing rapidly in recent years as more investors and organizations recognize the importance of addressing climate change and promoting sustainable development.