What are green bonds and how do they work?

What are green bonds and how do they work?

Green bonds are fixed-income instruments designed to raise funds for projects with positive environmental impacts. They work like traditional bonds but the proceeds are exclusively used for green projects.

What types of projects are typically funded by green bonds?

Common projects include renewable energy, energy efficiency, sustainable waste management, and clean transportation initiatives.

How do green bonds differ from regular bonds?

The main difference is the use of proceeds. Green bonds specifically fund environmentally friendly projects, while regular bonds can finance a wide range of activities.

Are there any risks associated with investing in green bonds?

Yes, risks include credit risk, market risk, and the potential for greenwashing, where projects may not be as environmentally friendly as claimed.

How can I start investing in green bonds?

You can start by researching green bond funds, consulting with a financial advisor, or purchasing individual green bonds through a brokerage.