Page 35 - Green Finance 2024

2.1. Green bonds and its impact

The issuance of the first green bond by the European Investment Bank in 2007 marked

a turning point in green finance, attracting considerable academic interest. Green bonds,

designed to fund projects with environmental benefits, quickly became a focal point of

research, as scholars sought to understand their impact and effectiveness.

Flaherty et al. (2017) conducted a comprehensive study on green bonds, examining their

role in financing environmentally sustainable projects. Their research highlighted how

green bonds had become a significant tool for raising capital for projects in renewable

energy, energy efficiency, and other environmentally friendly initiatives. The study also

explored the market performance of green bonds, noting their growing popularity among
investors and their potential to bridge the funding gap for sustainable projects.

Another significant contribution in this area was made by L. H. Nguyen, Dung, Minh,

Quynh, and Ngan (2023), who explored the motivations behind the issuance of green

bonds and their potential to drive corporate behavior towards more sustainable practices.
Their research indicated that green bonds not only provide essential funding for

environmental projects but also signal a commitment to sustainability from the issuing

entities, influencing corporate strategies and investor perceptions.

The impact of green bonds on the broader financial markets was another area of
academic focus. Studies investigated how green bonds were influencing investment

patterns and whether they were leading to a reallocation of capital towards more

sustainable projects. These investigations revealed the potential of green bonds to

catalyze a shift in financial markets towards greater environmental responsibility.

2.2. Expanding to other instruments and broader impacts

Following the success of green bonds, academic research expanded to explore a variety

of other green finance instruments. These included sustainability-linked bonds, green

loans, and sustainability-linked loans, each with unique characteristics and potential
impacts on environmental sustainability.

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