Green Bonds: What They Are and Why You Should Invest

How to Invest in Green Bonds

By Kristi Waterworth – Updated Sep 27, 2025 at 10:18 PM | Fact-checked by Frank Bass

Key Points

Green bonds finance eco-friendly projects like renewable energy and sustainable infrastructure.
Investors can buy green bonds directly or through funds for diversified exposure.
Regular reporting by issuers builds trust and shows real-time environmental impact.

Investing in the name of sustainability has taken off like a rocket over the last decade, and green bonds are one of the most talked-about green asset classes.

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Green Bonds

Debt instruments designed to fund projects that promote environmental sustainability, renewable energy, and climate resilience.

These fixed-income securities are designed for initiatives that matter to the environment, such as renewable energy, fighting climate change, and supporting sustainable and environmentally sound development. Below, we break down green bonds, explaining what they actually facilitate and how to invest in them.

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Child standing outside holding a globe above their head. — Image source: Getty Images.

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Common types of green bonds.
Type of bond	Issuer and Purpose
Corporate green bonds	Issued by companies to fund environmentally friendly projects within their operations
Municipal green bonds	Issued by local governments to finance public infrastructure projects like sustainable transportation or water treatment facilities
Sovereign green bonds	Issued by national governments to support large-scale environmental initiatives
Supranational green bonds	Issued by international organizations, such as the World Bank, to fund global environmental projects
Green asset-backed securities (ABS)	Backed by a pool of green assets, such as loans for renewable energy projects

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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Kristi Waterworth has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.