Green and Sustainable Municipal Bonds: Accelerating Infrastructure Investment for Equitable and Sustainable Cities

Abstract

The financing gap to actualise sustainable and resilient urban infrastructure visions in the fight against climate change spans the trillions annually. Municipal bonds, traditionally used to finance public infrastructure projects, are undergoing a transformative shift towards sustainability. In the proliferation of green bond markets, cities encounter various barriers, including a lack of standardisation, limited investor awareness, market size and liquidity concerns, data and reporting challenges, and higher administrative and verification costs. Major research gaps remain on the actual impact of green and sustainable municipal bonds that boost both environmental and social justice and equity. This chapter explores their role and contributions as a strategic financial instrument to expedite urban transformation through accelerated infrastructure investment. It offers an in-depth examination of green municipal bond issuance practices in Canada, China, Hong Kong, and the United States. The chapter offers findings from descriptive research conducted using a within-in-case analysis following a cross-case analysis, allowing emergent and common pattern identification. The findings of this study contribute valuable insights for policymakers, financial institutions, and urban planners on utilising innovative financial instruments to provide a means to align city infrastructure investment with sustainable development and ensure just transition.