Green Bond

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DEFINITION of 'Green Bond'

A tax-exempt bond which is issued by federally qualified organizations and/or municipalities for the development of brownfield sites. Brownfield sites are areas of land that are under utilized, have abandoned buildings, or are under developed. They often contain low levels of industrial pollution.

Green Bonds are short-hand for Qualified Green Building and Sustainable Design Project Bonds.

INVESTOPEDIA EXPLAINS 'Green Bond'

These bonds are created to encourage sustainability and the development of brownfield sites. The tax-exempt status makes purchasing a green bond a more attractive investment when compared to a comparable taxable bond. To qualify for green bond status the development must take the form of any of the following:

1) At least 75% of the building is registered for LEED certification;
2) The development project will receive at least $5 million from the municipality or State; and
3) The building is at least one million square feet in size, or 20 acres in size.

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