ROLE OF GREEN BONDS IN PROMOTING SUSTAINABILITY AND THEIR EFFECTS ON PUBLIC POLICY

Abstract

Objective: During the last decade, the launch of green bonds has been one of the most important breakthroughs in sustainable financing. The effect of environmental labels on bond yields has been a common topic. Green bonds have become increasingly common, particularly in sectors where environmental factors are economically significant for businesses. Green bonds have been taken for consideration to boost environmental performance, indicating their efficacy in reducing businesses' ecological impact. Result: These findings are specific to green bonds that have been independently confirmed, demonstrating the need of authorization as a control instrument in the green bond market. The investors have a favorable reaction to the news of issuance, with a stronger reaction for initial suppliers and securities certified by independent organizations. After the issuance, the issuers' environmental performance improves (in the form of higher environmental ratings and reduced Co-2 emissions), and long-term and green investors get a greater stake in the companies. Method: Overall, the results are consistent with a signaling argument, suggesting that issuing green bonds is a credible way for businesses to demonstrate their dedication to environmental protection by developing Green Bonds in Business for Sustainable Growth [GB-BSG] to meet the challenges mentioned above. Conclusion: Our research is among the first experimental inquiries into the effects of green bonds on the sustainability practices of businesses, the motivations of investors and issuers to enter the green bond market, and the significance of green bonds in redistributing capital to environmentally responsible endeavors.