Corporate Green Bonds

This chapter examines corporate green bonds as a central climate finance instrument through which private capital markets contribute to the net-zero transition. Tracing their evolution from early multilateral experimentation to a mainstream corporate financing channel, the chapter analyzes how green bonds function as use-of-proceeds debt instruments that link capital allocation to defined environmental expenditures under disclosure and reporting regimes. It documents market development across major jurisdictions, with particular emphasis on the EU and China, and contrasts regulatory-led standardization with more market-driven approaches in the US. Drawing on recent market data and academic evidence, the chapter reviews the financial pricing of corporate green bonds, the conditions under which a green premium emerges, and the role of external review, taxonomies, and post-issuance reporting in sustaining credibility. It further assesses whether corporate green bond issuance is associated with changes in firm behavior, including environmental investment and emissions outcomes. The chapter concludes that corporate green bonds are best understood not merely as labeled debt, but as an institutional technology that structures credibility, mitigates information asymmetry, and channels long-term finance toward decarbonization when embedded within coherent regulatory and policy environments.