DefinePK

Abstract

This study provides a comprehensive review of academic and industry literature on green bonds, analyzing their emergence, evolution, mechanisms, impacts, and future prospects. As specialized fixed-income instruments financing environmental and climate-aligned projects, green bonds have experienced exponential growth, transforming sustainable finance. The study elucidates the drivers catalyzing the green bond market’s expansion, including heightened environmental awareness, investor demand, and supportive regulations. It explores green bonds’ roles in funding renewable energy, sustainable infrastructure, and impactful corporate initiatives. The environmental, social, and economic benefits of green bonds are highlighted, from emissions reductions to innovation spillovers. Challenges surrounding definitions, costs, liquidity, and impact measurement are discussed. The review finds that despite limitations, green bonds hold transformative potential to mobilize finance towards sustainability goals. Continued growth, standardization, and innovative applications can further solidify green bonds as essential instruments financing the global transition to a low-carbon, climate-resilient future.