Green bonds: how to invest in the ecological transition and choose the right funds without falling into the trap of greenwashing

Faced with the acceleration of climate change and the considerable financing needs of the energy transition, green bonds, also called green bonds, are attracting growing interest from investors. More than $650 billion of these supports were issued worldwide in 2025, bringing the cumulative outstanding amount of this market to more than $4,000 billion, according to the NGO Climate Bonds Initiative. In detail, a green bond works like a traditional bond: a government, a company or an institution borrows money from investors and undertakes to pay them interest then repay the capital at maturity.

The difference lies in the use of the funds raised: “They must be used exclusively to finance or refinance projects providing obvious environmental benefits,” recalls Timothée Pubellier, senior bond manager and specialist in sustainable bonds at Ostrum. The proceeds from an issue can be intended for programs with a positive environmental impact, such as the development of renewable energies, clean transport, the energy efficiency of buildings, the sustainable management of natural resources or the preservation of biodiversity.

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Precisely identify the portion of the portfolio devoted to green bonds

However, even green, this support does not constitute a guaranteed investment. Like any bond, its value can go up or down depending on market conditions. And it remains exposed to the risk of issuer default and changes in interest rates. For a saver, purchasing green bonds directly can be complex. You must be able to analyze the financial solidity of issuers, monitor the issues available on the market and build up a sufficiently diversified portfolio. This is why many investors favor specialized bond funds.

These structures build portfolios made up of dozens, even hundreds of green bonds. Their management team selects issuers, analyzes risks, monitors compliance with environmental criteria and monitors investments. Through these products, the saver benefits from diversification according to sectors, geographic areas and bond maturities.

Before investing, there are several points to consider. The first concerns fund strategy. Some are dedicated exclusively to green bonds while others combine them with social or sustainable bonds. It is therefore important to precisely identify the portion of the portfolio devoted to green bonds.

Find all the articles in our file on responsible investments below:

• Savings: the return to favor of responsible investments

• Green savings accounts: how to finance ecology without risking your savings?

• Green savings: how to avoid the pitfalls of greenwashing?

• The essential green shift of SCPIs (to be published on 11/13)

• Invest in real estate differently thanks to solidarity real estate companies (to be published on 11/14)

• Green ETFs: how to benefit from the return of sustainable investments? (to be published on 11/15)

• How to invest in unlisted assets to finance the green transition? (to be published on 11/16)

The level of risk constitutes a second element to monitor. The credit quality of issuers, the duration of bonds held, exposure to currencies or sensitivity to interest rates can have a significant impact on performance. The level of annual management fees must also be reasonable (less than 2%), because it has a direct impact on the final perceived return.

Finally, investors concerned about the environmental impact of their savings should not be satisfied with the green designation of a UCITS. The impact reports published by management companies, transparency on the use of funds and project selection methodologies constitute valuable indicators for assessing any risk of greenwashing.

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To avoid this, savers can consult the SFDR classification of funds. Article 9 funds pursue a clearly defined sustainable investment objective, while Article 8 funds simply promote environmental or social characteristics. This information is included in the product's regulatory documentation and on the management company's website.

Machine-translated from French