What are green bonds and how do they promote sustainable finance?

Green bonds are fixed-income financial instruments used to raise funds specifically for environmentally friendly and sustainable projects. These projects can include renewable energy, pollution control, clean transportation, sustainable agriculture, and climate change adaptation. Issued by governments, corporations, or financial institutions, green bonds provide investors with an opportunity to support environmental initiatives while earning returns. They play a crucial role in sustainable finance by directing capital toward projects that reduce carbon emissions and support ecological goals. Green bonds also enhance transparency, as issuers are required to report how the funds are used. By linking investment with sustainability, green bonds encourage responsible financing, attract global investors, and support the transition to a low-carbon economy.