An international empirical study of the impact of green bonds on sustainable development goals

Purpose This study aims to investigate the role of green bonds in achieving the sustainable development goals (SDGs), focusing on climate action, clean energy production and the reduction of fossil fuel consumption. Design/methodology/approach Using statistical data from 63 nations between 2002 and 2021, a generalised method of moments (GMM) model analyses the impact of green bonds on global emissions, renewable energy production and fossil fuel consumption. Findings The results show that green bonds significantly reduce emissions and fossil fuel usage, including natural gas, coal and crude oil. The institutional role is vital in promoting environmentally friendly behaviour. Environmental taxes have varied impacts, while foreign direct investment (FDI) affects the environment adversely. Practical implications This research offers insights for policymakers, investors and financial institutions, demonstrating that green bonds effectively lower CO2 emissions and reduce fossil fuel consumption. It highlights the importance of robust legal frameworks and economic growth in enhancing the benefits of green bonds. These findings can inform policies and investment strategies that promote sustainable finance and long-term environmental goals. By actively supporting the issuance of green bonds, countries can significantly advance efforts to mitigate climate change and facilitate a sustainable energy transition. Originality/value Green bonds represent a recent financial innovation. This study introduces novel indicators related to fossil fuel consumption and examines the role of institutional quality in shaping global environmental outcomes. Additionally, it investigates the impact of the COVID-19 pandemic on emissions and energy consumption.