Abstract

Sustainable finance includes a range of financial instruments, investments, and decision-making that integrate environmental, social, and governance (ESG) factors into the management and allocation of capital. The goal of sustainable finance is to support long-term sustainable economic activities and green projects. Green bonds are a type of sustainable financial instrument which supports projects that help mitigate climate change and environmental degradation. They are used to finance renewable energy, energy efficiency, and other climate-related initiatives. Apart from this, sustainable bonds and sustainable linked bonds have also emerged in recent times, issue proceeds of which are invested not just in green projects but also in projects with social benefits. As per the report of Climate Bond Initiative, from 2006 to 2024, the cumulative value of these bonds issued was 55.9 billion USD in India which was merely 0.99% of the global market. The global market recorded a cumulative value of 5660.3 billion USD for the same time period. In January 2023, for the first time, the Government of India issued sovereign green bonds worth 80 billion INR. On the other hand, Securities Exchange Board of India (SEBI) records show that 8873 crore INR has been raised by several public and private companies by issuing green and sustainability linked bonds as on 30.09.2025. In this backdrop, this study aims to compare India’s position with respect to its global counterparts in the market for green bonds by collecting secondary data. The paper also highlights the potential for green bonds and offers policy recommendations to streamline its usage in India which subsequently will help achieve the sustainable development goals.