Abstract

Green bonds (GBs) have emerged as a promising tool for climate finance since their inception, especially in climate-vulnerable South Asian countries. As one of the countries adversely affected by climate change, Bangladesh is no exception in utilizing this green financial instrument. This research aims to investigate the status quo of the GB market in Bangladesh. In addition, it compares South Asian countries from the perspectives of supporting initiatives, tax incentives, and the use of proceeds. It takes Bangladesh, India, Pakistan, Sri Lanka, and the Maldives for comparison. Our findings reveal that Bangladesh is lagging behind some regional peers, although significant improvements have been made in recent years. Nonetheless, challenges remain, as our analysis finds limited investor awareness, lack of standardization, regulatory clarity, and narrow areas of use of proceeds from the GB. By addressing these challenges and learning from other countries, Bangladesh can unleash the full potential of GBs for their climate finance needs.