Which one of the following statements best describes the term ‘Green

Which one of the following statements best describes the term ‘Green Bonds’?

They are bonds issued by governments to fund environmental projects.
They are bonds issued by corporations to fund green initiatives.
They are bonds issued to finance projects that have environmental benefits.
They are bonds issued to finance renewable energy projects only.
This question was previously asked in
UPSC CAPF – 2010
Option C best describes the term ‘Green Bonds’.
– Green Bonds are a type of bond specifically earmarked to raise money for climate and environmental projects.
– They can be issued by various entities, including governments (sovereign, state, municipal), intergovernmental organizations, and corporations. Options A and B are partially correct by mentioning specific issuers but are not comprehensive.
– The crucial characteristic of a green bond is that the proceeds are used to finance projects with environmental benefits. These projects can include renewable energy, energy efficiency, sustainable waste management, sustainable land use, biodiversity conservation, clean transportation, sustainable water management, climate change adaptation, etc. Option D is too restrictive by limiting it only to renewable energy projects.
– Option C provides the most accurate and broad description of what a green bond is used for.
The green bond market follows guidelines developed by organizations like the International Capital Market Association (ICMA), such as the Green Bond Principles, which recommend the use of proceeds, project evaluation, management of proceeds, and reporting.