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Original Research

SUSTAINABLE INVESTING UNVEILED: THE ROLE OF BOND RATINGS IN GUIDING GREEN BOND INVESTMENTS

T. LAVANYA 1, Dr. SADASIVAM RANI 2.

Vol 18, No 12 ( 2023 )   |  DOI: 10.5281/zenodo.11485045   |   Author Affiliation: Research Scholar, Malla Reddy University, Hyderabad. Senior Assistant Professor, Department of Management Studies, Geethanjali College of Engineering and Technology, Hyderabad. Email: lavanya.mba@gcet.edu.in 1; Assistant Professor, School of Management and Commerce, Malla Reddy University, Hyderabad. Email: srani@mallareddyuniversity.ac.in 2.   |   Licensing: CC 4.0   |   Pg no: 2014-2028   |   Published on: 31-12-2023

Abstract

The increasing urgency to address climate change has propelled sustainable investing into the spotlight, with green

bonds emerging as a pivotal instrument for mobilizing the capital required for environmental projects. This study

delves into the critical role that bond ratings play in guiding investments in green bonds, shedding light on how

these ratings influence investor confidence and the allocation of funds towards sustainable initiatives. By

employing a mixed-methods approach, combining quantitative analysis of green bond performance with

qualitative interviews from industry experts, this research offers a comprehensive overview of the interplay

between bond ratings and green bond investments. The findings suggest that higher bond ratings, often indicative

of lower risk and better sustainability credentials, significantly impact the attractiveness of green bonds to

investors. Additionally, the study examines the evolution of rating criteria to encompass environmental, social,

and governance (ESG) factors, highlighting the shift towards more holistic assessments of investment risk and

potential. This research contributes to the broader discourse on sustainable finance by providing insights into the

mechanisms through which bond ratings can facilitate more informed and impactful green bond investments.


Keywords

Sustainable Investing, Environmental Projects, Investment Risk, Capital Mobilization, Sustainable Finance.