Green bonds and sustainable finance: Performance insights and future outlook

Abstract

This review paper comprehensively analyses green bonds and their role in sustainable finance. It examines green bonds' definition, characteristics, performance, market trends, challenges, and opportunities. Findings reveal that green bonds offer investors an avenue to align financial objectives with environmental goals while generating competitive returns. However, challenges such as standardised definitions and insufficient investable projects hinder market growth. Implications for investors, issuers, and policymakers are discussed, highlighting the importance of integrating environmental, social, and governance factors into decision-making processes. Recommendations include further research to enhance understanding and stakeholder collaboration to promote transparency and accountability. Ultimately, green bonds promise to advance environmental sustainability and combat climate change in a resilient, low-carbon economy.