A Systematic Literature Review on the Evolution of Green Bonds as a tool to transition towards Sustainable Finance Practices

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:This literature review maps the green bond research landscape and identifies gaps for future studies.

🏢実務担当者:Green bond issuers and investors can use findings on transparency and monitoring to enhance credibility.

🏛政策担当者:Policymakers should note the importance of credible monitoring and reporting frameworks for sovereign green bonds to effectively drive sustainable finance.

Global sustainable-debt markets have expanded at an exceptional rate, surpassing USD 3 trillion at the end of Q3 in 2025. Green bonds account for most of the labelled sustainable debt, representing over 60% of total aligned volume in the first half of 2025. The growing commitment to achieving net-zero emissions by 2070 and the increasing issuance of sovereign green bonds, the evolution of the instrument in accelerating low-carbon and sustainable finance practices, remain underexplored. This research, therefore, seeks to address the gap by examining the role and challenges of green bonds in advancing low-carbon and sustainable finance practices. There are limited literature reviews done, which gives the understanding of green bonds. Therefore, this study investigates the path of green bond development and its influence on low-carbon and sustainable finance practices using a systematic literature review approach. The objective of this study is to review the path of the green bond market since its establishment. Therefore, they have become a prominent instrument for financing the global shift toward sustainability. This systematic literature review integrates Thematic analysis to identify, analyze, and report themes within the data, and grounded theory was used to obtain fundamental theoretical constructs from the combined data. Findings indicate that green bonds, particularly sovereign green bonds, show possible impact when supported by transparent governance arrangements, credible monitoring systems, and financial signals that highlight investor trust. However, persistent data gaps, weak reporting frameworks, and short observation periods undermine the reliability of environmental impact assessments. Future research should address these gaps through cross-country comparative analyses, longitudinal evaluations, and interdisciplinary frameworks integrating insights from economics, finance, and policy studies. The findings hold practical significance for policymakers, investors, and financial institutions seeking to align capital markets with their climate commitments.

• semanticscholar https://doi.org/10.2139/ssrn.6357398first seen 2026-05-06 00:23:08