THE PLACE OF GREEN BONDS IN FINANCIAL MARKETS
THE PLACE OF GREEN BONDS IN FINANCIAL MARKETS

Summary/Abstract: Given the urgent nature of climate change and the limited time frame available, there is an imperative for our society to transition to an economy that is both environmentally sustainable and low in carbon emissions. A crucial way to achieve this transition lies in the development of financial markets specifically designed to finance projects that are compatible with climate-friendly objectives. This climate plays an important role in determining the pace and motivation of the financial markets for society to make this transition. An important tool for assessing the ultimate impact of climate change on financial markets is the emergence of green bonds. These bonds allow various entities, whether governments or organizations, to channel their conditional debt investments into projects or assets aimed at mitigating or adapting to the effects of climate change. In addition, they offer investors a way to address environmental, social and governance (ESG) concerns by facilitating investments that are consistent with climate goals. This ethical or "green" dimension currently differentiates the market from its conventional counterparts. The review article examines the growth of the green bond market internationally, examining its popularity and implications. It introduces the market by emphasizing its ability to manage risks and provide opportunities for the financial sector. In addition, the paper sheds light on the persistent challenges faced by the paper market, particularly its rapid expansion in recent years. It concludes by discussing the environmental impact of green bonds and highlights the need for standardization and regulation in the market. Finally, the paper offers policy recommendations aimed at various stakeholders, such as regulators, governments and issuers, and concludes by noting ongoing standardization efforts initiated by other market participants.

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