An overview of green, social, sustainability, and sustainability-linked (GSSS) bonds

The earth has witnessed a tremendous change concerning climate and the associated risks. In a move for a greener and climate-resilient economy, countries around the world have moved from traditional finance to sustainable finance. The promising GSSS bonds have become a potential instrument to cater to global SDG financing. These bonds offer an opportunity to align financial returns with sustainable outcomes. Globally, GSSS bond issuances have grown by an average annual rate of 80%, meaning that the market size has almost doubled from one year to the next since 2014 (OECD 2022). This paper provides an overview of green, social, sustainability, and sustainability-linked bonds (GSSS or GS3 bonds). The overview starts with the definition of GS3 bonds, a review of existing literature on green bonds and GSSS bonds, global growth trends, growth in emerging markets, global regulatory development in this domain, the development of GS3 bonds in India, and the significance of ESG rating providers in the development of the green market. Although there is an exponential increase in GS3 bonds globally, for further transition to sustainable finance by corporates and sovereign, initiatives in the regulatory, and financial markets and credibility of ESG rating providers are imperative, not just in developed markets but in emerging markets as well.