What is the incentive to investors for buying green bonds?

Hi there! One incentive to buying green bonds is that green bonds could be a potential hedge against climate risk. For investors feel that climate change will potentially affect companies and government, by adding green bonds, it will represent a "free option" to hedge climate-related risks. Another incentive is the corporate disclosure. This additional disclosure as compared to traditional bonds creates more dialogue between the borrowers and lenders.

Historically, green bonds have also been able to deliver reasonable returns with relatively low volatility. Here is an analysis of the data done by Eastspring Investments.

As an investor, financially, in Singapore? Probably none, and I don't think there has been any research done to suggest that returns from green bonds are more negatively correlated to other instruments (compared to other bonds) and so provide greater diversification benefits.

However, your investment might help push capital injections towards "green" projects and reduce funding gaps, so "green" projects that might otherwise not have occurred will occur. So, if both fixed income instruments are equal except that one is green and the other is not, you might as well invest in the green bond and reap the karmic benefit at the same time! :)