4. Introduction to Green Economy

Green Economy signifies the evolution in the environmental and sustainability domain, which is progressing in parallel with public awareness of environmental impact.

Ever growing public awareness, along with government regulation, laws and incentives affect the organizational approach towards green technology and accelerate their transition to sustainable practices.

UNEP defines Green Economy as

one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. It is low carbon, resource efficient, and socially inclusive" (UNEP 2011).

In its most basic form, such an economy is low carbon, efficient, and clean in production, as well as inclusive in consumption, based on sharing, circularity, collaboration, solidarity, resilience, opportunity, and interdependence. It is concentrated on increasing options for national economies, using targeted and appropriate fiscal and social protection policies, and supported by strong institutions that are specifically designed to safeguard social, ecological floors and it recognizes that there are many and diverse pathways to environmental sustainability.
An inclusive green economy is a solution to the linear economic model of today, which creates inequality, encourages wasteful production and consumption, creates ecological and resource scarcities, and poses significant risks to the environment and public health. It is an opportunity to advance both sustainability and social equity as functions of a stable and prosperous financial system within the contours of a finite and fragile planet. It is a pathway towards achieving Sustainable Development Goals, eradicating poverty while safeguarding the ecological thresholds, which underpin human health, well-being, and development

Green bonds :

Green bonds is somewhat different from normal bonds, which is a financial instrument, it is the fund raised to exclusively finance or re-finance “Green projects” or business activities. It is used synonymously with green investment and is used for development of green infrastructure which are low carbon intensive and climate resilient.

Like any other bonds which is a fixed income financial instrument used to raise capital through a debt capital market. Normally for a bond the issuer raises a fixed amount from the investors over a fixed time period ( i.e maturity) and repayes the capital(principal) on maturity along with the interest which is payed along the way.
The green bond is “ labeled” ( i.e. designated) as green by the issuer which is strictly and transparently used to projects and assets with positive environmental benefits.

Why to raise Green Bonds:

For Investors

• Investors can get risk-adjusted financial returns with environmental benefits.
• Satisfies ESG liability and green investment legal requirements.
• Provides improved risk assessment in an opaque fixed income market and contributes to knowledge advantage through use of transparent proceed reports.
• Contributes to better government and community relations.

For Issuers/ Bond raising body

• Strong investor demand can lead to oversubscription and increase in issuance size.
• Improved diversification of investor base, potentially reducing exposure to demand reduction risk.
• Marketing and reputational benefits.
• Increased credibility in implementation of sustainability goals.
• Efficient tracking of procedure and authentic reporting contributes to enhanced internal governance and communication.