Who Issues Sovereign Green Bonds?
Governments (both central and state), organizations, and companies are eligible to issue green bonds. Green bonds can be issued only to finance projects that have a positive impact on the environment and climate and offer investors with a fixed regular income. The projects could involve green building, renewable energy, and sustainable transportation among other things. The profits generated from these bonds would be used for environmental projects. Hence, it is different from regular bonds which permit the issuer of the bond to use the earnings for several purposes.
Although green bonds can be issued by multiple entities, sovereign green bonds can only be issued by the national government. Hence, if ICICI Bank Ltd. issues a green bond, it will be as it is. But if the central government issues a green bond, it will be termed a “Sovereign green bond”. Due to its name, the sovereign green bonds are safer than the green bonds.
In the financial year 2021-22, the Chinese government issued the Sovereign Green Bond of $76 Billion, the highest till now by any nationals.