UPSC Prelims 2026 · GS Paper 1 · Question 92
A bond whose proceeds are used only to finance or refinance a combination of both environmental and social projects is called :
Correct answer: Option C
Economy
Options
- (a) Green Bond
- (b) Social Bond
- (c) Sustainability Bond
- (d) Sovereign Bond
Detailed solution
Answer
Option (C) — Sustainability Bond
Explanation
- According to the International Capital Market Association (ICMA), a Sustainability Bond is a bond where proceeds are exclusively used to finance or refinance a combination of both green (environmental) and social projects.
- Green Bonds finance only environmental/climate-related projects, while Social Bonds finance only social projects (e.g., affordable housing, healthcare).
- Sovereign Bonds are government-issued debt instruments and are not defined by the use of proceeds for environmental or social purposes.