Green bonds are debt instruments issued to fund projects with clear environmental benefits — renewable energy, clean transport, sustainable buildings, or pollution reduction. Investors lend money to the issuer and receive interest, while knowing proceeds target climate-positive work.

How green bonds work

Governments, banks, and companies issue bonds to raise capital. With green bonds, the issuer commits to allocating net proceeds to eligible green projects and typically reports on how the money was used. Standards like the Green Bond Principles help define what counts as "green."

Returns usually come from regular coupon payments and repayment at maturity — similar to conventional bonds, with an added transparency layer on environmental use of funds.

Green bonds vs regular bonds

Financial structure is often the same; the difference is purpose and reporting. Green bonds don't guarantee better returns — credit risk still depends on the issuer. Some investors accept similar yields to support environmental goals; others seek market rates first.

Green bonds and sustainable finance at bunq

bunq integrates sustainability into banking — from tree planting on spending to policies that avoid financing fossil fuels. Learn more on our sustainability page. For investments aligned with your values, explore bunq Stocks and sustainable funds alongside sustainable finance principles.

Frequently asked questions

Are green bonds risk-free?

No. Issuer default risk applies like any bond. "Green" describes use of proceeds, not a safety guarantee.

Can individuals buy green bonds?

Many green bonds are sold to institutional investors, but exposure is available through green bond funds and some retail platforms.

What is greenwashing in bonds?

When issuers label bonds "green" without credible projects or reporting. Look for external reviews and clear allocation reports.