Green bonds
Green bonds are instruments issued to raise funds for sustainability or climate-related investments. These bonds are similar to traditional bonds in that they pay interest to investors. Still, the proceeds from the sale of green bonds are earmarked for projects with a positive environmental impact. As a result, green bonds generally have the same credit rating as the issuer’s traditional bonds, and their maturity, coupon, and other terms are similar to conventional bonds. However, they may have additional features, such as a “use of proceeds” clause, which ensures the funds are used exclusively for eligible environmental projects.
