The Role of Green Bonds and Sustainable Finance in Capital Markets
Chapter from the book:
Sönmez,
A.
R.
(ed.)
2024.
Research on Money and Capital Markets.
Synopsis
Sustainable finance is an approach that takes into account social, environmental and governance issues while carrying out economic activities. In this context, green bonds stand out as one of the most important tools of sustainable finance. Green bonds are important in combating global problems such as climate change, reducing carbon emissions and supporting environmental projects, where traditional financial instruments are inadequate. Especially with the goals of the Paris Climate Agreement, the need for green finance on a global scale has increased and green bonds have become one of the most effective tools of this transformation. Green bonds, which were first issued by the European Investment Bank in 2007 to finance environmental projects, have become a rapidly growing market on a global scale. Funds obtained from green bonds are used in investments aimed at renewable energy, energy efficiency, sustainable infrastructure projects and reducing carbon emissions. The fact that these bonds are regulated with international standards such as Green Bond Principles (GBP) and have a transparent reporting mechanism helps increase investor confidence and ensures transparency and accountability in bond issuance. Turkey, as a developing market in the field of sustainable finance, has taken important steps, especially in green bond issuance. Companies and banks, especially from the energy and industry sectors, have issued bonds for foreign markets. In this study, the development of green bonds within the framework of sustainable finance, the difficulties they face are examined, and information is also provided about their potential in Turkey.