Green Bonds

In Context 

  • The government proposes to issue sovereign green bonds to mobilise resources for green infrastructure. 

About 

  • The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.
    • The issuance of sovereign green bonds is part of the government’s overall borrowing programme.
  • These rupee-denominated papers will have a long tenure to suit the requirement of green infrastructure projects.

What is Green Bond?

  • It is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects
    • The first green bond was issued in 2007 by the European Investment Bank, the EU’s lending arm. 
    • This was followed a year later by the World Bank. Since then, many governments and corporations have entered the market to finance green projects.
  • These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.
  • They are designated bonds intended to encourage sustainability and to support climate-related or other types of special environmental projects. 
  • Aims and Objectives: 
    • They are aimed at energy efficiency, pollution prevention, sustainable agriculture, fishery and forestry, the protection of aquatic and terrestrial ecosystems, clean transportation, clean water, and sustainable water management.
    •  They also finance the cultivation of environmentally friendly technologies and the mitigation of climate change.

Source: TH

 
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