The Rise of Green Bonds: Investing with Sustainability in Mind

10 November 2025

What Are Green Bonds?

In recent years, the global financial landscape has witnessed a major shift toward sustainability. Investors are increasingly prioritizing projects that not only generate returns but also have a positive environmental impact. Green bonds — debt instruments dedicated to financing eco-friendly projects — are at the forefront of this transformation.

In India, the growing interest in renewable energy, clean transportation, and climate resilience is driving the rise of green bonds. This article by BondScanner, a SEBI-registered Online Bond Platform Provider (OBPP), explores what green bonds are, their benefits, examples, and how Indian investors can participate responsibly in this growing asset class.

Green bonds are fixed-income securities issued to raise funds for environmentally beneficial projects. The proceeds are earmarked for initiatives like renewable energy, sustainable water management, clean transportation, and energy-efficient infrastructure.

They operate like traditional bonds — offering periodic coupon payments and principal repayment at maturity — but differ in purpose. The core idea is to channel capital toward climate-positive investments.

Key Features of Green Bonds:

  • Funds are used exclusively for green projects.

  • Issuers provide regular reports on project impact.

  • They may carry certifications or align with frameworks like the Green Bond Principles (GBP) or Climate Bonds Standard.

Green Bonds in India: A Growing Market

India has become one of the most active emerging markets for green finance. The first green bond was issued in 2015 by Yes Bank, and since then, both government and corporate issuers have entered the space.

According to SEBI and RBI data, India’s cumulative green bond issuance crossed USD 25 billion by 2024, with contributions from sectors like renewable energy, electric mobility, and sustainable infrastructure.

Notable Green Bond Issuers in India:

  • Indian Renewable Energy Development Agency (IREDA)

  • Power Finance Corporation (PFC)

  • REC Limited

  • NTPC Limited

  • State Bank of India (SBI)

  • Adani Green Energy Limited

These issuers have supported projects ranging from solar parks and wind farms to electric vehicle infrastructure and smart grids.

Green Bond Examples and Their Impact

IssuerYear of IssueUse of ProceedsApprox. Size (INR/Equivalent)Type
IREDA2024Renewable energy projects₹1,500 croreCorporate Green Bond
NTPC Limited2023Solar and wind projectsUSD 300 millionMasala Bond
SBI2023Clean transportation and solar powerUSD 650 millionInternational Green Bond
World Bank (IBRD)2022Climate mitigation projects globallyUSD 2 billionSovereign Green Bond
Government of India2023Green hydrogen, EVs, solar initiatives₹16,000 croreSovereign Green Bond

Benefits of Green Bonds

Investors and issuers alike are turning toward green bonds due to their unique advantages.

1. Environmental Impact

Green bonds directly fund projects that reduce carbon emissions, promote renewable energy, and support sustainable urban development.

2. Portfolio Diversification

They offer exposure to the growing sustainable finance segment while maintaining fixed-income characteristics.

3. Enhanced Transparency

Most issuers of green bonds follow strict reporting standards, providing details on how proceeds are used and the measurable environmental impact.

4. Policy and Regulatory Support

Government-backed initiatives like India’s Sovereign Green Bond Programme (launched in FY2022–23) highlight policy commitment toward climate finance.

5. Long-Term Stability

Green bonds often attract institutional investors with long-term sustainability mandates, contributing to lower volatility and strong market demand.

How to Invest in Green Bonds in India

Investing in green bonds in India can be done through multiple channels, depending on your investor profile and objectives:

1. Online Bond Platforms

SEBI-registered platforms enable transparent access to listed bonds — including green and sustainable issuances — through regulated exchanges.

2. Stock Exchanges (NSE/BSE)

You can buy listed green bonds directly via your demat account on NSE or BSE, similar to purchasing corporate bonds.

3. Mutual Funds and ETFs

Certain debt mutual funds and ETFs invest in a basket of green or ESG-focused bonds, providing diversified exposure.

4. Institutional or Private Placements

Larger investors may access green bond issues via private placements or institutional debt markets.

Challenges in Green Bond Investing

While green bonds are promising, investors should be mindful of associated risks:

  • Greenwashing Risk: Some issuers may label bonds as “green” without transparent reporting or measurable outcomes.

  • Liquidity Concerns: Certain green bonds may have lower trading volumes compared to conventional corporate bonds.

  • Interest Rate Sensitivity: Like all fixed-income securities, green bond prices fluctuate with changing interest rates.

  • Verification Costs: Independent certification and compliance with sustainability frameworks may add complexity for issuers.

The Road Ahead: Green Finance in India

The future of green bond investment in India looks promising. The government’s emphasis on net-zero goals by 2070, coupled with private sector participation, is accelerating capital inflows into sustainable projects.

Emerging Trends to Watch in 2025:

  • Sovereign Green Bond Expansion: Continued issuance to fund large-scale climate initiatives.

  • Corporate Sustainability Goals: More companies integrating ESG mandates into financing strategies.

  • International Collaboration: Cross-border investments and partnerships with global green finance institutions.

  • Retail Investor Inclusion: Platforms like BondScanner simplifying access to sustainable fixed-income opportunities.

FAQs on Green Bonds

1. What are green bonds used for?

Green bonds are used to fund environmentally sustainable projects such as renewable energy, clean transportation, water conservation, and climate resilience.

2. Who issues green bonds in India?

Issuers include both government entities (like the Government of India and IREDA) and corporates such as NTPC, REC, and SBI.

3. Are green bonds profitable?

Green bonds provide returns similar to conventional bonds. Their main appeal lies in supporting sustainability while earning fixed-income returns.

4. How can I buy green bonds in India?

You can invest via SEBI-registered online bond platforms, through NSE/BSE, or via green bond mutual funds.

5. What are some examples of green bonds in India?

Examples include sovereign green bonds issued by the Government of India and corporate issuances from NTPC, IREDA, and SBI.

Conclusion

Green bonds are redefining how investors approach sustainability in finance. As India continues to lead the clean energy transition, the growth of green bonds reflects a crucial shift toward environmentally responsible investing.

For investors seeking stable fixed-income opportunities that align with sustainability goals, green bonds provide a transparent and impactful pathway.

Disclaimer

This blog is intended solely for educational and informational purposes. The bonds and securities mentioned herein are illustrative examples and should not be construed as investment advice or personal recommendations. BondScanner, as a SEBI-registered Online Bond Platform Provider (OBPP), does not provide personalized investment advice through this content.

Readers are advised to independently evaluate investment options and seek professional guidance before making financial decisions. Investments in bonds and other securities are subject to market risks, including the possible loss of principal. Please read all offer documents and risk disclosures carefully before investing.

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