Q. With reference to Sovereign Green Bonds, consider the following statements:
1.They are generally issued at a lower interest rate compared to traditional bonds.
2.These are issued by the private companies focused on sustainability initiatives.
3.They contribute to the development and standardization of green finance practices.
Which of the statements given above are correct?
Explanation –
Statements 1 and 3 are correct. Sovereign Green Bonds are typically issued at lower interest rates compared to traditional bonds due to their association with environmental and sustainability projects, which often attract socially responsible investors and institutions. Sovereign Green Bonds play a significant role in developing and standardizing green finance practices by establishing a framework for financing sustainable and environmental projects, such as renewable energy, energy efficiency, and sustainable agriculture initiatives.
Statement 2 is incorrect. Sovereign Green Bonds are issued by governments or government-backed entities, not private companies. The term “Sovereign” implies a government issuer. Private companies can issue their own green bonds, but those are referred to as Corporate Green Bonds.
Source: The Hindu
