Green bonds are debt securities issued by companies or governments, where the proceeds are exclusively used for environmentally beneficial projects such as renewable energy, pollution prevention, and climate change mitigation.
Key benefits include direct environmental impact, competitive financial returns, attracting environmentally conscious investors, and enhancing issuer reputation.
Challenges include the risk of 'greenwashing' (projects marketed as green that aren't truly environmentally friendly) and the complexity of verifying a project's environmental impact.
In Bangladesh, the Bangladesh Securities and Exchange Commission has developed guidelines for green bonds, and some green bonds have been issued in the market.