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What are green bonds? Discuss the challenges faced by emerging economies like India in promoting sovereign green bonds.

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Category: Economy (GS -III),

Test Date: 17 Feb 2025

Approach:

  • Introduction: Define green bonds—debt instruments issued to fund projects that reduce emissions or promote climate resilience.
  • Role in Sustainable Development: Financing renewable energy, climate adaptation, and other green initiatives.
  • Challenges in Emerging Economies (India): Weak Investor Demand; Liquidity Issues; Lack of Strong Ecosystem; Limited Participation from Foreign Investors
  • Suggest improvements: Greater transparency in reporting, exploring sustainability bonds, and partnerships with multilateral banks for better credit ratings to boost investor confidence.
  • Conclude accordingly
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