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ESG & Sustainable Finance

Green Bond

Also called: green bonds, use of proceeds bond, green bond principles

A green bond ring-fences its proceeds for environmental projects, with reporting on how the money was used. It's ordinary credit risk of the issuer with an earmark attached. The pricing benefit — the greenium — is real but small, typically a few basis points, and the recurring criticism is fungibility: money is fungible, so funding a green project may simply free other funds for anything else.

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