Green Bonds vs Conventional Bonds
Research Proposal: Green Bonds vs Conventional Bonds
Introduction
A report by Agliardi and Agliardi (2021) argues that global climate change demands bold actions to ensure that the current generation leaves behind a better planet for the future generation. The climate conference in Paris in 2015 set out an objective to completely decarbonize the global economy by the end of the 21st century. Green bonds formed part of the ambitious plan adopted by 196 nations in the United Nations Framework Convention on Climate Change (UNFCCC) to ensure a safer planet.
According to Lebelle et al. (2020), green bonds are securities with fixed income that are used to finance green projects beneficial to the environment or the climate. However, Gibon et al. (2020) assert that bond issuers are free to designate their securities as green without having any legal limitations. Barua and Chiesa (2019) reveal that only India and the People’s Republic of China have a well-defined statutory and regulatory definition of a green bond. Compared to conventional bonds, Taghizadeh-Hesary et al. (2021) argue that green bonds do not have great complexity. The distinct characteristic of green bonds from conventional bonds is their requirement for extra information regarding the environmental impact of their returns (Antoniuk and Leirvik, 2021). According to Cortellini and Ida (2021), comparable to conventional bonds, green bonds are categorized into corporate bonds, covered bonds, financial sector bonds, project bonds, municipal bonds, asset-backed bonds, and supranational, sub-sovereign and agency (SSA) bonds
