GREEN BONDS: MARKET CHALLENGES FOR INNOVATIVE AND SPECIALISED FINANCING INSTRUMENTS

Green bonds are innovative capital market debt instruments specially created for an easier and more efficient approach to financing projects with the primary goal of environmental protection and investments in clean energy. The idea of issuing green bonds developed from the global trend of importance and concern for environment protection due to extreme climate changes. Moreover, issuers emphasise their responsible behaviour and concern for environmental protection through the issuance of green bonds, which can increase their value on the market. Meanwhile, more investors are becoming interested in socially and environmentally responsible investments, while seeking out new investment opportunities. This paper analyses the problem of "green" project financing and the efficiency of green bonds, with remarks on their impacts on the development of alternative, clean energy sources, and environmental protection. In that sense, this paper analyses the role and perspective of issuers and investors in green bonds, i.e. in achieving the goal of efficient financing of "green" projects. The main goal is to outline the financial role and possibilities of green bonds in environmental protection and clean energy development. In the empirical research part of the paper, a comparative analysis is made for the Republic of Croatia on the available data for environmental protection and renewable energy project values, and data on the leading institutional investors in the part concerning investment potential. The results of such an analysis may be a valuable source of information that can lead to better understanding of the importance and the role of innovative capital markets instruments in financing capital intensive, but environmentally responsible projects of public interest. Consequently, governments could also benefit from green bonds, recognising the possibility of their inclusion in financing renewable energy and environmental protection projects if public expenditure value is taken into consideration.