SUSTAINABLE FINANCE IN THE BOND MARKET: THE CASE OF GREEN BONDS

Given the urgency of climate change and the short time frames it becomes necessary that society support a transition toward a greener and more sustainable economy. One way to do so is through green bond market that can play a critical role in attracting a more diversified base of investors and directing capital to finance general climate or environmental projects. Namely, green bonds represent an innovative instruments in the area of sustainable finance whose proceeds are used exclusively to finance or refinance projects that belong to the category of eligible green projects and contribute to environmental objectives such as renewable energy, pollution prevention, climate change mitigation, natural resource and biodiversity conservation, while at the same time green bonds offer several benefits for issuers, socially responsible investors and policymakers. With this in mind, the aim of this paper is to outline the key features of these debt instruments and the guidelines underlying their issuance, as well as to assess the current stage of development in the global green bond market. Research indicates that, despite possible barriers, the global green bond market has steadily grown and diversified over the past decade, highlighting the strong potential of these innovative financial tools for supporting the sustainability transition.