Exploring the sustainability impact of green bonds on ecological and resource capacities

The rising importance of green bonds (GB) in the achievement of net-zero targets cannot be overlooked. Therefore, researchers have devoted special attention to green bond instruments and their association with carbon emission mitigation. Accordingly, this research provides insights into GB's role in promoting environmental sustainability with empirical evidence of the impacts of GB on ecological footprints (EF), biocapacity (BC), and load capacity (LC) across 29 green bond issuing countries from 2014 to 2022. The study used the instrumental variable GMM and Driscoll-Kraay standard error approach to verify the empirical linkages. The findings suggest that green bond issuance increases biocapacity and load capacity and reduces ecological footprints. The results further revealed that the impacts of green bonds on biocapacity and load capacity are higher in high-income economies than in middle-income economies, and green bonds decrease ecological footprints more in middle-income countries. Moreover, the outcomes showed that green bonds significantly improve footprints from grazing land, cropland, buildup land, and forest product land. The benchmark estimates have further been verified by changing the dependent variable and the estimation approach with GLM. The conclusions drawn from the study allows policymakers to strengthen green bond standards and adopt improved ecological policies.