fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects
asset-linked and backed by the issuing entity’s balance sheet
carry the same credit rating as their issuers’ other debt obligations.
green bonds represent a broader category of instruments related to projects with a positive environmental impact.
Climate bonds specifically finance projects that reduce carbon emissions or alleviate the effects of climate change
may come with tax incentives to enhance their attractiveness to some investors.
Investors who purchase these bonds can expect to make a profit as the bond matures. In addition, there are often tax benefits for investing in green bonds.
institutional investors—entities like mutual funds, hedge funds, and endowments that can afford to invest large sums in debt instruments.
raise money for climate and environmental projects
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.
green bonds finance projects 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.
Green bonds may come with tax incentives such as tax exemption and tax credits, making them a more attractive investment
One of the bank’s first green issuances financed the Rampur Hydropower Project, which aimed to provide low-carbon hydroelectric power to northern India’s electricity grid. Financed by issuances of green bonds, it produces nearly 2 megawatts per year, preventing 1.4 million tons of carbon emissions.
numerous mutual funds and ETFs that offer exposure to the green bond space.
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