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Glossary > Asset Class

Green bonds

Green bonds

A green bond (also known as an “environmental bond”) is a loan issued on the market by a firm or institution so that they can finance so-called “green” projects, i.e. those which bring with them an environmental benefit, for example, renewable energy, water management or land use.

Green bonds differ from traditional bonds in that the issuer must commit to the precise use of the funds raised and the regular publication of reports for investors to keep them up to date on the project’s progress.

In July 2007, the European Investment Bank (EIB) was the first institution to issue a green bond. It has since been followed by other institutions, in particular the World Bank, as well as companies and countries.

Although green bonds still represent a niche investment on the bond market, issuance is growing rapidly as part of the green transition. However, these assets still do not have any precise standards that are unanimously recognised at international level.

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