Sustainable development of the green bond markets in India: Challenges and strategies

Abstract

AbstractGreen bonds have emerged as a useful and powerful financial strategy to mitigate the financial problems of low‐carbon projects. India, which is a significant contributor to global warming, is facing serious challenges in increasing the market for and acceptability of green bonds. This study identified different challenging factors influencing the development of green bond markets in India and suggests suitable strategies to overcome these challenges. The key factors responsible for the development of green bond markets were identified by an extensive literature review and critical examination through experts' opinion. The best worst method (BWM) was used to rank challenges and strategies based on the priority (or weights) provided by the industry experts. The results indicate that the lack of clear risk profiling and legislative support involved in green bonds are the most crucial challenges for the Indian green bond market, followed by lack of market knowledge and lack of demand among investors for green bonds. Among the strategies, standardization emerged as the most notable to promote green bond in emerging economies. This study extends the literature by providing comprehensive insights into the challenges restricting the growth of the green bond market and develops a detailed understanding of the different strategies to overcome those challenges. This study also provides a roadmap for policymakers to restructure the green bond market and to help fulfill India's commitment to the Paris Agreement.