Exponential Growth of Sustainable Debt: Green Bonds Surge

Raghu Dharmapuri Tirumala () and Piyush Tiwari
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Raghu Dharmapuri Tirumala: University of Melbourne

Chapter Chapter 4 in Advances in Infrastructure Finance, 2023, pp 79-106 from Springer

Abstract: Abstract A significant number of investments are required to meet the target under the SDGs and internal financial resources of a country are not adequate to meet these requirements. Green bonds are one of the methods of raising finances for investments on full or partial capital expenditure of green projects. Since about the last 8–10 years, many institutions have started issuing of green bonds and this has been exponentially growing that by 2015, it has increased more than four times since its 2013 levels. In the year 2021, USA, China, Germany, France, and UK were the leading countries that have issued green bonds. Several emerging economies such as China, India, Poland, and Hungary have also issued green bonds during 2020–21. MDBs were the frontrunners in devising innovative ways of generating financial resources for addressing the climate, environment, and sustainability challenges. The third-party or independent certifications are sought after as they give better credence to the issuers of their intentions and to the investors that their funds have been rightly deployed. Many countries, regions, and institutions have developed their own taxonomies of the definition and process to be adopted for green bonds. Exchanges help investors invest in green bonds and other climate solutions and can act as a platform for developing indices that can accelerate the market. The current application of green bond proceeds is restricted to a few sectors such as the renewable energy, buildings, and transport. Green taxonomy will help in accelerating the existing levels of the investors’ inclination and understanding about how the green bonds work. This will also address the issue of greenwashing and increase the trust of the investors in the green bonds. Also, the taxonomy should be flexible enough to include various preferences of the different investors.

Keywords: Climate change; Evolution of green bonds; Green bonds; Green bonds market; Sustainability (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/978-981-99-0440-2_4

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