Green bonds can mobilize resources from domestic and international capital markets for climate change adaptation, renewables and other environment-friendly projects. They are no different from conventional bonds, their only unique characteristic being the specified use of proceeds which are invested in projects that generate environmental benefits. In its simplest form, a bond issuer (public or private) will raise a fixed amount of capital, repaying the capital and accrued interests over a set period of time. Sovereign bonds and forest bonds are being issued to finance biodiversity related activities.
The Green Bond market has been mobilizing with increasing intensity since the first Green Bond was issued by the World Bank in 2007. At the end of the fiscal year 2018, there were 91 eligible projects and a total of US$15.4 billion in commitments.
Recently, in the summer of 2019, one of the largest green bonds ever was issued by the Dutch government – with a value of roughly US$ 6.8 billion. To read more about this particular bond and the development of the overall Green Bond market, visit here.
Link to Guide entries:
Return-Based Investments —> Capital Markets