What Is a Green Bond ?

Green Bond 

A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects. These bonds are typically asset-linked and backed by the issuing entity's balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations. Dating back to the first decade of the 21st century, green bonds are sometimes referred to as climate bonds, but the two terms are not always synonymous. 

KEY TAKEWAYS 

• A green bond is a fixed-income instrument designed specifically to support specific climate-related or environmental projects.
• Green bonds may come with tax incentives to enhance their attractiveness to investors. 
• The World Bank is a major issuer of green bonds. It has issued 164 such bonds since 2008, worth a combined $14.4 billion. 
• In 2020, the total issuance of green bonds was worth almost $270 billion, according to the Climate Bond Initiative. The cumulative issuance since 2015 is over $1 trillion.