Green bonds

Green bonds are standard bonds created to finance environmentally beneficial projects. There are four types of green bonds:

  • Green “Use of Proceeds” bond: secured by assets (comparable to standard bonds)
  • Green “Use of Proceeds” revenue bond: secured by income-producing projects
  • Green project bond: secured by a projects assets and balance sheet
  • Green securitized bond: secured by a larger asset pool

The Green Bond Principles, a set of voluntary best practice guidelines, identify key opportunities for green bond projects. Several of these opportunities cover elements of the circular economy, including:

  • Renewable energy
  • Energy efficiency (including efficient buildings)
  • Sustainable waste management
  • Sustainable land use (including sustainable forestry and agriculture)
  • Clean transportation
  • Clean water

Investor demand for green bonds continues to grow as Environmental, Social and Governance (ESG) criteria become increasingly important. Institutional investors, ESG investors, governments, corporate treasuries and retail investors are all including green bond projects into their portfolios.