Green bonds for sustainable development: Review of literature on development and impact of green bonds

Industrial development in the last century have some negative consequences, and environmental concern is one of them. The practitioners and researchers are trying to study the mechanism of funding for environment-friendly projects and how it affects its stakeholders. To the best of our understanding, no literature review is conducted to analyze the factors associated with the growth and the impact of green bonds on issuers' fundamental performance measures to meet Environmental, Social, and Governance (ESG) objectives. This review attempts to fill the gap in the literature and classify studies based on and give a comprehensive overview of factors associated with the green bonds. This review highlighted that financing is an essential factor to support sustainable development, and there are some challenges to gather finances for environment-friendly projects. Green bonds are one of the financial instruments to finance such tasks, and they provide capital to fund green projects. We argue that the favorable regulatory environment and improvement in disclosure quality are essential factors for the growth of green bonds. Moreover, the review also highlighted the impact on the fundamental characteristics of the issuer of green bonds and if it gives some advantages over other financial securities. Lastly, we also suggested some future directions of research on the topic.