What Are the Challenges Associated with Green Bonds?
Despite their benefits, green bonds also come with challenges:
Verification and Certification: Ensuring that projects meet environmental criteria can require rigorous verification and certification processes. Market Size and Liquidity: The green bond market is still relatively small compared to traditional bond markets, which can affect liquidity. Cost of Issuance: Issuing green bonds can be more expensive due to the need for third-party audits and certification. Investor Demand: While interest in green bonds is growing, it may not yet be sufficient to meet the funding needs of all eligible projects.