Q. Consider the following statements regarding “Green Bond”:
1.It is a type of debt security created for funding or re-funding projects contributing positively to the climate and/or ecosystem.
2.The significant difference between Green Bonds and ordinary bonds is that the funds raised are only used to support initiatives that have a good influence on the environment.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: A
Notes:

Explanation: A Green Bond is a type of debt security created for funding or re-funding projects contributing positively to the climate and/or ecosystem.

  • The significant difference between Green Bonds and ordinary bonds is that the funds raised are only used to support initiatives that have a good influence on the environment, such as green construction, renewable energy etc.
  • When these bonds carry guarantees related to the repayment of principal and payment of interest by the sovereign or the government, they are called sovereign green bonds (SGrB).

Source: FORUMIAS