A bond whose proceeds are used only to finance or refinance a combination of both environmental and social projects is called:
Answer & explanation
Answer: (c) Sustainability Bond
The label depends on what the proceeds fund. Green bonds fund environmental projects, social bonds fund social projects, and a sustainability bond funds a combination of both green and social projects.
- ✓ (c) Sustainability bonds apply proceeds exclusively to finance or re-finance a combination of green and social projects.
- ✗ (a) A green bond finances projects with clear environmental benefits only.
- ✗ (b) A social bond finances projects that address a specific social issue or achieve positive social outcomes, not a combination of environmental and social projects.
- ✗ (d) ‘Sovereign’ describes the issuer (a government), not the use of proceeds.
Remember · Use of proceeds decides the label: green = environment, social = social outcomes, sustainability = both together.
Sources
- World Bank Treasury, IBRD Sustainable Development Bonds ↗ “World Bank Sustainable Development Bonds support the financing of a combination of green and social, i.e. “sustainable development”, projects, programs, and activities in member countries.”
- ICMA: Green, Social and Sustainability Bonds, a high-level mapping to the SDGs (June 2019) ↗ · reference work “Sustainability Bonds are any type of bond instrument where the proceeds will be exclusively applied to finance or re-finance a combination of green and social projects … Green Bonds are any type of bond instrument where the proceeds will be exclusively applied to finance or re-finance projects with clear environmental benefits … Social Bonds finance projects that directly aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes, especially but not exclusively for a target population(s).”
Question and answer: UPSC's provisional GS Paper I (2026, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 1 Oct 2026 (how we verify). ·