Green bonds : Purpose & Issuing agency
Q. Which of the following statements is/are correct about green bond?
1. A green bond publicly states that capital is being raised to fund ‘green’ projects.
2. World Bank, government agencies and municipalities can issue green bonds.- Published on 30 Nov 15a. Only 1
b. Only 2
c. Both
d. None
ANSWER: Both
- A green bond publicly states that capital is being raised to fund ‘green’ projects, which typically include those relating to renewable energy, emission reductions and so on.
- There is no standard definition of green bonds as of now.
- Indian firms like Indian Renewable Energy Development Agency Ltd and Greenko have in the past issued bonds that have been used for financing renewable energy, however, without the tag of green bonds.
- Green bonds are issued by multilateral agencies such as the World Bank, corporations, government agencies and municipalities. Institutional investors and pension funds also have appetite for such bonds.
- For instance, investment funds BlackRock and PIMCO have specific mandates from their investors to invest only in bonds which fund green projects. The issuer provides periodic reports about the project.
