What type of projects are primarily funded by green bonds?

Prepare for the Fundamentals of Sustainability Accounting Test. Hone skills with real exam questions, detailed explanations, and strategic tips for success. Make the most of every practice attempt!

Green bonds are specifically designed to raise funds for projects that have positive environmental impacts. The primary focus is on financing initiatives that address climate change and contribute to sustainable development. This includes projects related to renewable energy, energy efficiency, clean transportation, sustainable agriculture, and waste management, among others. By defining the use of proceeds from the bonds for such environmentally-focused projects, investors can directly support initiatives that promote sustainability and reduce carbon footprints.

The other options, while they may involve funding needs, do not align with the fundamental purpose of green bonds, which is solely to fund climate and environmental projects. For instance, marketing and advertising campaigns, traditional construction projects, and healthcare initiatives do not directly address environmental impacts in the way that projects funded by green bonds do. Thus, focusing on climate and environmental projects allows for a clear alignment with the goals of sustainability and responsible investing that green bonds aim to support.

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