Green Bonds

Key Highlights

• Green bonds are special types of loans that governments, companies, or global organizations use to raise money for projects that help the environment.

• *Types of green bonds includes sovereign, corporate, asset-backed and hybrid green bonds.

What are Green Bonds?

Green bonds are special types of loans that governments, companies, or global organizations use to raise money for projects that help the environment. Unlike regular bonds, the cash from green bonds is used only for eco-friendly initiatives like renewable energy, cleaner transport, or sustainable water systems.

Why Use Green Bonds?

• Environmental Impact: They fund projects that tackle climate change or promote sustainability, like solar panels or green buildings.

• Broad Application: They align with global aims, like the UN’s Sustainable Development Goals, for cleaner energy and climate action.

How Do Green Bonds Work?

• Issuing the Bond: When a government or company needs funds, they raise money by offering bonds to the public.

• Use of Proceeds: The issuer promises to use the funds only for green projects and often shares updates on how the money is spent and its environmental impact.

• Verification: Many green bonds are reviewed by independent experts to make sure they meet eco-standards and are transparent.

Key Features and Benefits

• Fixed Income: Investors get predictable interest payments, making them a reliable investment.

• Tax Incentives: Some green bonds come with tax breaks, which make them even more appealing.

• Transparency: Issuers share details on how the money is used and the environmental wins, so investors know their impact.

• Social Responsibility: You can support the planet while earning a return on your investment.

Types of Green Bonds

• Sovereign Green Bonds: Issued by countries to fund big eco-projects, like national renewable energy programs.

• Corporate Green Bonds: Companies use these to pay for their green initiatives, like sustainable factories.

• Asset-Backed Green Bonds: Tied to specific eco-assets, like wind farms, that generate money to pay investors.

• Hybrid Green Bonds: Mix extra security features with green goals for added investor confidence.