Green finance (2026 syllabus) - part 1

In this lesson

1. 0:00 Green finance in F3 context
2. 1:08 Why green finance is mainstream now
3. 3:03 The greenium and cost of capital
4. 3:51 Four green finance instruments explained
5. 4:31 Green bonds and use of proceeds
6. 5:16 Sustainability linked bonds versus green bonds
7. 6:38 Key distinction for exam success
8. 7:25 How green finance is tested in F3

About this lesson

is spent, while sustainability-linked bonds tie the cost of borrowing to environmental performance. Understanding this difference is essential for answering objective test questions accurately and avoiding common exam traps. Green finance has moved from niche to mainstream, driven by the scale of capital needed for net zero transition, regulatory pressure, and growing investor demand through environmental, social and governance mandates. The green bond is the primary instrument you need to master—it's a standard fixed income bond with one defining feature: proceeds are ring fenced exclusively for projects with clear environmental benefit. This use-of-proceeds restriction is what separates green bonds from sustainability-linked instruments, where the company can spend money freely but pays a higher coupon if it misses agreed targets. The lesson walks you through each instrument's mechanics and when to use them, then focuses on the distinction most likely to appear in your exam. You'll see how examiners test your understanding by describing an instrument and offering tempting but incorrect options that confuse the two approaches. By learning to ask whether an instrument constrains the use of money or the cost of money, you'll develop the precision needed to pick the right answer every time.

Duration: 8m