What is ‘Greenium’, recently mentioned in news?
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Greenium refers to the premium that the issuer receives on green bond issuances wherein investors are willing to accept lower yields on such debt instruments due to the sustainable nature of the projects financed by their proceeds.
The Chief Economic Advisor emphasized the need for private investors to prioritize sustainable investments, noting the low “greenium” from India’s sovereign green bond offerings. Greenium, or green-premium, refers to the savings issuers gain on coupon payments for green bonds, which have lower yields than conventional bonds due to their sustainable appeal. Green bonds finance green projects like renewable energy, electric buses, and energy efficiency. These bonds attract investors willing to accept lower returns for sustainability benefits, reducing both physical and financial risks. This makes green projects financially attractive for issuers.