Green bonds - GS questions based on daily current affairs

1)   Green Bonds are issued to raise money for which of the following projects?

1) Climate change
2) Renewable energy
3) Waste management

a. 1, 2
b. 2, 3
c. 1
d. All of the above
Answer  Explanation 

ANSWER: All of the above

Explanation:

  • Green bonds, as the name suggests, refer to bonds issued to raise money for a ‘green’ project like climate change, renewable energy, sustainable water or waste management or clean transport.
  • In January 2016, the Securities and Exchange Board of India (SEBI) issued the regulatory framework for issuance of such bonds by Indian companies.
  • UK is also encouraging Indian companies that may be looking at projects, such as those for renewable energy, to raise money in the UK through green bonds.
2)   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.

a. Only 1
b. Only 2
c. Both
d. None
Answer  Explanation 

ANSWER: Both

Explanation:
- 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.

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