Green Bonds
- Use of Proceeds: Funds are used exclusively for projects with positive environmental impacts, such as renewable energy, energy efficiency, and climate change mitigation.
- Examples of Projects: Renewable energy, green buildings, clean transportation, pollution prevention, and biodiversity conservation.
- Guidelines: Typically follow the Green Bond Principles (GBP), which promote transparency and reporting on environmental objectives.
Social Bonds
- Use of Proceeds: Proceeds are used to address specific social issues, aiming for positive social outcomes, such as affordable housing and access to essential services.
- Examples of Projects: Affordable basic infrastructure, employment generation, food security, and socioeconomic advancement.
- Guidelines: Social Bond Principles (SBP) guide these bonds, focusing on addressing social challenges.
Sustainability Bonds
- Use of Proceeds: Funds are used for a mix of green and social projects, focusing on both environmental sustainability and social benefits.
- Examples of Projects: A combination of projects from both green and social categories.
- Guidelines: These bonds follow guidelines that align with both the Green Bond Principles and Social Bond Principles.
Sustainability-Linked Bonds
- Use of Proceeds: Unlike other bonds, these do not specifically finance green or social projects but are linked to the issuer’s sustainability performance and goals.
- Key Feature: The bond’s financial conditions (e.g., interest rates) are tied to the issuer’s ability to achieve specific sustainability targets.
Overall, while green bonds focus on environmental projects, other types of sustainable bonds either support social initiatives or combine both green and social objectives. Sustainability-linked bonds, on the other hand, incentivize issuers to meet broader sustainability goals without being tied to specific projects.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-green-bonds-differ-from-other-types-of-sustainable-bonds/
