In general, a green bond is an investment product for the raising of finance for climate change solutions and the promotion of projects with environmental benefits. Practically, it is a debt instrument like any other bond with the following main characteristics:
- It offers a fixed return and its proceeds are used to finance (or refinance) environmentally friendly projects;
- It can be issued by a company, a financial institution or even the government for a fixed period; and
- It finances projects in areas such as energy, transportation, waste management, construction, water and land use.