In the world of finance, due to global environmental challenges, there is big transformative financial tools such as climate bonds and green bonds have come in existence. In the growing trends of sustainable finance, these climate and green bonds are being utilized for reducing carbon emissions and increasing energy efficiency to promote sustainable development. This chapter includes History and rise of greens and climate bonds. This study also explores the Innovations and mechanism of both kind of bonds. International standards such as European green bond standard, ASEAN green bond standard, green bond principles and ISO 14030 for green and climate bond also being taken in this study. This chapter explore the role of green and climate bond in examining the international policies and framework for the purpose of low carbon economy. In this chapter we also include the roadmap of bonds which explore the whole mechanism of green and climate bond from project identification to monitoring and compliance toward it. This study analysis the role of international organizations such as ICMA, MDBs. These organization formulate framework for making principles and policies for green bond and climate bond. The aim of this study is to provide comprehensive understanding of role of green and climate bond in sustainable development at global level and to give valuable insights for organizations and policy makers toward sustainable future.