Blockchain-enabled Transparency in Green Bonds and Climate Finance: A Framework for Trust and Accountability

Abstract

Green bonds and climate finance have emerged as essential instruments for achieving the United Nations Sustainable Development Goals (SDGs) and transitioning toward a low-carbon economy. However, persistent challenges of information asymmetry, inconsistent disclosure standards, and allegations of greenwashing undermine investor confidence and market credibility. In this context, blockchain technology—characterized by its immutability, decentralization, and transparency—offers transformative potential to enhance traceability, accountability, and efficiency across the green bond lifecycle. This paper critically examines the role of blockchain in improving transparency and trust in green finance mechanisms. Drawing upon recent literature (2020–2024), policy reports, and case evidence from emerging and developed markets, it proposes an integrated framework illustrating how distributed ledger technology (DLT) can strengthen proceeds tracking, real-time impact reporting, and verification of sustainability claims. Findings suggest that blockchain-enabled green bond systems can significantly reduce transaction costs, increase investor participation through tokenization, and minimize risks of misreporting. Nonetheless, challenges related to interoperability, regulatory ambiguity, data quality, and environmental costs of blockchain operations remain. The study contributes to the growing discourse on sustainable finance by linking financial innovation with environmental accountability. It further provides strategic implications for policymakers, regulators, and financial institutions aiming to integrate digital trust technologies into green finance ecosystems.