what is a green bond 
as the world increasingly focuses on addressing climate change and other environmental challenges green bonds have become popular for investors to align their financial goals with their values and contribute to positive change green bonds are a type of fixed income investment used to fund projects with a positive environmental impact like traditional bonds green bonds offer investors a stated return and a promise to use the proceeds to finance or refinance sustainable projects either in part or whole these bonds are issued by public private or multilateral entities to raise capital for initiatives that contribute to a more sustainable economy and generate identifiable climate environmental or other benefits projects funded by green bonds include renewable energy energy efficiency clean public transportation pollution prevention and control conservation sustainable water and wastewater management and green buildings that meet internationally recognized standards and certifications green bonds are meant to encourage sustainability and support climate related or other environmental projects they help finance projects ranging from energy efficiency to sustainable agriculture and forestry to protecting aquatic and terrestrial ecosystems they also finance the cultivation of environmentally friendly technologies and climate change mitigation like other bonds the green variety often has tax incentives in the form of credits and exemptions making them more attractive than comparable taxable bonds green bonds are often verified by a third party such as the climate bonds standard board which certifies that the bond will fund projects that provide environmental benefits history of green bondsas recently as 2012 the value of all green bonds issued was just 2 6 billion but in recent years the market has boomed as governments introduce new requirements to tackle climate change and many investors want investments that meet their esg goals bloomberg reports that sales of green bonds climbed to a record 575 billion in 2023 of that total 190 billion of green bonds were issued by governments during the year demand is expected to increase in the coming years thanks to cheaper borrowing costs made possible by the expectation of falling interest rates and european regulations to improve the transparency comparability and credibility of the green bond market green bond funds developed in the 2010s broadening the ability of retail investors to participate in these initiatives allianz se alv de axa s a state street corporation stt tiaa cref blackrock inc blk axa world funds and hsbc holdings plc hsbc are among the investment companies and asset management firms that have sponsored green bond mutual funds or exchange traded funds etfs the year when the world bank issued the first so labeled green bond for institutional investors real world example of green bondsthe world bank is a major issuer of green bonds in 2022 the last year for which data is available it reported 40 8 billion in bonds issued 28 2 billion in funds disbursed and 33 1 billion in new lending committed previously the bank had reported issuing 14 4 billion in green bonds from 2008 through 2020 the funds went to projects for energy and efficiency 33 clean transportation 27 and agriculture and land use 15 one of the bank s first green bond sales financed the rampur hydropower project which provided low carbon hydroelectric power to northern india s electricity grid financed by issuances of green bonds it produces almost 2 megawatts per year preventing 1 4 million tons of carbon emissions in 2022 its combined projects lowered carbon emissions by 8 4 million tons types of green bondswhile all green bonds represent a form of debt financing for an environmental project the specific characteristics of each instrument may differ based on its issuer what the proceeds are used for and the recourse of bondholders to the issuer s assets in case of a liquidation among other factors the following are types of green bonds available on the market 