How do green bonds compare to regular bonds?

What are green bonds and how do they differ from regular bonds?

Green bonds are fixed-income instruments specifically earmarked to raise money for climate and environmental projects. Unlike regular bonds, which can fund any type of project, green bonds are dedicated to financing sustainable initiatives.

Are the returns on green bonds typically lower than those on regular bonds?

Not necessarily. While some green bonds may offer lower yields due to their focus on sustainability, many are competitive with regular bonds. The returns depend on various factors, including the issuer's credit rating and market conditions.

What are the risks associated with investing in green bonds?

The risks include credit risk, market risk, and the potential for greenwashing, where projects may not be as environmentally friendly as claimed. It's essential to research the issuer and the specific projects funded by the bonds.

Can you give examples of projects funded by green bonds?

Sure! Examples include renewable energy projects, energy efficiency upgrades, sustainable agriculture, and conservation efforts. These projects aim to have a positive environmental impact.