UPSC Prelims 2026 question on Sustainability Bond

A Sustainability Bond is a debt instrument in which the funds raised are used solely to finance or refinance a mix of both environmental (green) and social initiatives. Hence option (c) is the correct answer.

Green Bonds are dedicated exclusively to environmental or climate-related projects, whereas Social Bonds support only social initiatives such as affordable housing, healthcare, or community development.

Sovereign Bonds are debt securities issued by governments and are categorized based on the issuer rather than the purpose of fund utilization for environmental or social objectives.

Even without prior knowledge of Sustainability Bonds, the Green Bond and Social Bond options could be eliminated, as each covers only one of the two purposes named in the question.