Green bonds - Egea SRI

What are Green Bonds and Why Do They Matter?

Many investors who are interested in sustainable investing are curious about green bonds. But what are green bonds and why do they matter? Green bonds help finance sustainable projects across the globe. Green bonds allow investors to green up their portfolios and companies and governments to finance more green projects. As a top sustainable and value-based investment firm, at EGÉA SRI we can help tell you everything you need to know about green bonds and help you invest in a green bond that aligns with your passion for the planet.

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What are Green Bonds?

It’s important to know all there is about green bonds and why they matter before you invest. Let’s answer some of the most frequently asked questions about green bonds:

Green Bond Definition

A green bond is a type of fixed-income instrument that is used specifically to raise money for climate and environmental projects. Green bonds are issued by governments, companies, and organizations. They might come with a tax incentive to enhance their attractiveness to investors. A green bond might help fund renewable energy, recycling, clean transportation, or sustainable forestry, but these are just a few examples. Green bonds allow you to do good for the planet while also seeing a financial return for yourself as an investor.

How Green Bonds Work

If a company or a government wishes to finance a green project, it can secure funding by issuing green bonds. Here is how it works: investors buy the bonds, and the company or government pays the investor back over time — and with interest. Typically, investors aren’t everyday investors. Instead, green bonds are typically sold to larger organizations, like pension funds that are moving forward with ESG investing and can purchase bonds in bulk. Then, individual investors can invest in mutual funds and exchange-traded funds that include green bonds in their offerings. 

Are Green Bonds Popular?

Green bonds are also more popular than ever. In 2020, green bond issuance amounted to a record $269.5 billion, according to research from the Climate Bonds initiative. The United States was the biggest player in green bonds, with $50 million in new issuances. The cumulative issuance of green bonds has reached over $1 trillion, according to the same research.

Green Bonds vs. Climate Bonds and Sustainable Bonds

Though the terms “green bonds” are often used interchangeably with the terms climate bonds and sustainable bonds, they are not the same thing. Climate bonds are also fixed-income financial instruments, but they are dedicated to climate change solutions. 

Green Bonds vs. Blue Bonds 

If you are interested in green bonds, perhaps you have also heard of blue bonds. While all blue bonds are green bonds, not all green bonds are blue bonds. Blue bonds are sustainability bonds specifically dedicated to financing projects to protect the oceans and related ecosystems. These projects might include supporting sustainable fisheries, protecting coral reefs and other fragile ecosystems, and reducing pollution and acidification. 

What are Green Bonds and Why Do They Matter?

Over the last 15 years, green bonds have become an important and effective tool in the fight against climate change. The world’s clean water supply and food security are at risk. About one million of our planet’s eight million animal and plant species are facing extinction. Financing is necessary to address climate change. Green bonds connect environmental projects with capital markets and investors. Investing in green bonds allows individuals and larger groups to make a positive difference for the planet with their investments. 


The Green Bond Principles

The Green Bond Principles are a set of guidelines that were created in 2014 by a collective of investment banks to help clarify the approach for the issuance of a Green Bond for investors. 

Use of Proceeds

This governs how bond funds can be spent and outlines eligible green projects, like energy efficiency in buildings, pollution prevention, renewable energy production, and sustainable land management.

Process for Project Evaluation and Selection

This explains what the green bond issuer should communicate to investors, like the goals of the project. 

Management of Proceeds

This governs how the funds generated by the bond should be spent and handled.


Reporting explains how the progress and impact of the green bond should be recorded. Ideally, the issuer will release an impact report with detailed information.

Examples of Green Bonds

These are just a few examples of projects that green bonds have helped finance: 

World Bank

The World Bank is a major issuer of green bonds and has issued $14.4 billion of green bonds since 2008. One of the bank’s bonds financed the Rampur Hydropower Project, which provided low-carbon hydroelectric power to northern India’s electricity grids. 


Apple is one of the largest private-sector issuers of green bonds. In 2020, Apple Inc. funded 17 green bond projects.


Walmart closed its first green bond in September 2021 and announced that it will allocate an amount equal to its $2 proceeds to projects like energy efficiency, waste recycling, and water conservation at its facilities. 


The vehicle manufacturer issued a green bond in September 2020 that will help fund electric car manufacturing and e-charging station infrastructure.

Why Should I Invest in Green Bonds?

There are several reasons why you might consider making your money even greener and investing in green bonds: 

Invest in a Better Future

Green bonds allow you to align your investments with your values. At EGÉA SRI, we help our clients make a difference with their investments. 

Tax Incentives

There are tax incentives for green bonds, in the form of tax credits and tax exemptions. This means investors might not have to pay income tax on the interest they earn. 

green bonds

Invest in Green Bonds with EGÉA SRI

If you are interested in beginning to invest sustainably, green bonds might be the right place for you to start. Our chartered SRI counselors can help you make investment choices that correlate with the positive sustainable changes you wish to see in the world. Contact us at EGÉA SRI with any of your additional questions about green bonds and why they matter today!  


Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice.  If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

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