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

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  • Swayam Prava Mishra

    (Utkal University)

  • Rajnish Kumar
  • Jashasya Rout

    (Utkal University)

Abstract

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.

Suggested Citation

  • Swayam Prava Mishra & Rajnish Kumar & Jashasya Rout, 2023. "An overview of green, social, sustainability, and sustainability-linked (GSSS) bonds," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 25(1), pages 127-145, December.
    • Handle: RePEc:spr:jsecdv:v:25:y:2023:i:1:d:10.1007_s40847-023-00275-8
    DOI: 10.1007/s40847-023-00275-8
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    References listed on IDEAS

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    1. Lloyd Freeburn & Ian Ramsay, 2020. "Green bonds: legal and policy issues," Capital Markets Law Journal, Oxford University Press, vol. 15(4), pages 418-442.
    2. Gong Cheng & Torsten Ehlers & Frank Packer, 2022. "Sovereigns and sustainable bonds: challenges and new options," BIS Quarterly Review, Bank for International Settlements, September.
    3. Juan Giráldez & Stephanie Fontana, 2022. "Sustainability-linked bonds: the next frontier in sovereign financing," Capital Markets Law Journal, Oxford University Press, vol. 17(1), pages 8-19.
    4. Flammer, Caroline, 2021. "Corporate green bonds," Journal of Financial Economics, Elsevier, vol. 142(2), pages 499-516.
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    Cited by:

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    2. Gucciardi, Gianluca & Ossola, Elisa & Parisio, Lucia & Pelagatti, Matteo, 2025. "Common factors behind companies’ Environmental ratings," International Review of Financial Analysis, Elsevier, vol. 100(C).

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    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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