As per OECD (2015),
Pros of Green Bond
- Financial returns of Risk-adjusted can be balanced out by Investors with environmental benefits.
- ESG requirements can be satisfied and mandating the green investments.
- Risk assessment can be improved in an opaque fixed-income market with the use of reporting.
- Pure-play, project and ABD can be used potentially to actively hedge climate policy risks including assets which are emissions-intensive.
- “Climate action” has been recognized as a non-state actor by the UNFCCC.
Cons of Green Bond
- Markets which are small and nascent with bond size smaller.
- Unified standards are lacking that raises confusion.
- Risk in the reputation is possible if question is raised for the integrity of green bond.
- Legal enforcement is in a limited scope for the green bond integrity.
- Complexity in research may arise due to lack in standardization.
- Extra due diligence is needed which may not be fulfilled always.