IAS 2026 — Economics Economy

2026mcqeasy

A bond whose proceeds are used only to finance or refinance a combination of both environmental and social projects is called :

Official previous-year question

Verified 2 Aug 2026.

Options

AGreen Bond
BSocial Bond
CSustainability Bond
DSovereign Bond

Did you get this right?

Solution

Correct Option

The correct option is C. Sustainability Bond

[as per provisional answerkey]

Explanation

Sustainable finance instruments are categorized based on the specific nature of the projects they fund. These classifications are governed by international standards such as the International Capital Market Association (ICMA) guidelines.

Statement A is Incorrect: Green Bonds are fixed-income instruments specifically earmarked to raise money for climate and environmental projects, such as renewable energy, energy efficiency, or pollution prevention. They do not include social project components.
Statement B is Incorrect: Social Bonds are issued to fund projects that achieve positive social outcomes, such as affordable housing, food security, healthcare, and socioeconomic advancement. They do not focus on environmental objectives.
Statement C is Correct: Sustainability Bonds are defined as bonds where the proceeds are exclusively applied to finance or re-finance a combination of both Green and Social Projects. They integrate the criteria of both Green Bond Principles (GBP) and Social Bond Principles (SBP).
Statement D is Incorrect: Sovereign Bonds are debt securities issued by a national government to finance government spending. While a sovereign bond can be "green" or "social," the term itself refers to the issuer (the state) rather than the specific thematic use of proceeds for environmental and social combinations.

Key Takeaway: Sustainability Bonds are hybrid instruments that simultaneously target environmental (Green) and social (Social) objectives within a single framework.

Your note

IAS Economy in other years

Economy 2025 Economy 2024 Economy 2023 Economy 2022 Economy 2021 Economy 2020 Economy 2019 Economy 2018 Economy 2017 Economy 2016 Economy 2015 Economy 2014

More IAS Economy questions

Which one of the following best describes the 'Crowding Out Effect' in the context of fiscal policy?

2026medium

Which of the following statements about Crowdfunding is/are correct? 1. Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project. 2. Small and Medium Enterprises (SMEs) are able to raise funds at lower cost of capital without undergoing rigorous procedures. Select the answer using the code given below:

2026medium

Which one of the following correctly represents the three key sub-indices of the Financial Inclusion Index (FI-Index) of the Reserve Bank of India (RBI)?

2026easy

Which one of the following best describes the key objective of India's 'Open Network for Digital Commerce' (ONDC) initiative?

2026easy

With reference to different Committees in India, consider the following details: Sl. No. | Committee | Objective | Organization under which it was formed 1. | R.N. Malhotra Committee | Comprehensive reforms of Insurance sector in India | Insurance Regulatory and Development Authority of India 2. | L.C. Gupta Committee | Preparing a roadmap for the introduction of derivatives trading in India | Securities and Exchange Board of India 3. | Urjit R. Patel Committee | Preparing a roadmap for reforming bank lending to the Housing sector | Reserve Bank of India 4. | Y.H. Malegam Committee | Preparing a roadmap for reforms in Microfinance sector in India | Reserve Bank of India In which of the above rows are all the details correctly matched?

2026hard

View all Economy questions

Keep practicing Economy

Work through every IAS Economy PYQ, year by year.

Browse all Economics topics

Correct Option

The correct option is C. Sustainability Bond

[as per provisional answerkey]

Explanation

Statement A is Incorrect: Green Bonds are fixed-income instruments specifically earmarked to raise money for climate and environmental projects, such as renewable energy, energy efficiency, or pollution prevention. They do not include social project components.
Statement B is Incorrect: Social Bonds are issued to fund projects that achieve positive social outcomes, such as affordable housing, food security, healthcare, and socioeconomic advancement. They do not focus on environmental objectives.
Statement C is Correct: Sustainability Bonds are defined as bonds where the proceeds are exclusively applied to finance or re-finance a combination of both Green and Social Projects. They integrate the criteria of both Green Bond Principles (GBP) and Social Bond Principles (SBP).
Statement D is Incorrect: Sovereign Bonds are debt securities issued by a national government to finance government spending. While a sovereign bond can be "green" or "social," the term itself refers to the issuer (the state) rather than the specific thematic use of proceeds for environmental and social combinations.

Key Takeaway: Sustainability Bonds are hybrid instruments that simultaneously target environmental (Green) and social (Social) objectives within a single framework.