The Green Ledger: How Blockchain Can Clean Up Sustainable Finance

Abstract

The rapid expansion of green finance has intensified the need for mechanisms that ensure transparency, traceability, and credibility in sustainable debt markets. Although green bonds are widely used to fund environmental projects, inconsistent taxonomies, variable reporting standards, and persistent risks of greenwashing continue to undermine investor trust. This paper examines how blockchain-enabled tokenization can enhance the governance architecture of green bond markets by providing immutable transaction records, automating compliance through smart contracts, and supporting more verifiable environmental impact reporting. Through a comparative analysis of Hong Kong’s tokenized green bond initiative (Project Evergreen) and India’s conventionally structured green bond market, the study evaluates how technological maturity, regulatory alignment, and institutional capacity shape environmental and financial outcomes. Using grounded theory and drawing on Information Asymmetry Theory, Principal–Agent Theory, Transaction Cost Economics, and Stakeholder Theory, the paper develops a conceptual framework explaining blockchain’s governance-enhancing role in sustainable finance. The findings show that blockchain significantly strengthens transparency, reduces monitoring costs, and improves accountability, although its efficacy depends on supportive regulatory ecosystems. The paper concludes by outlining policy pathways for harmonizing taxonomies, advancing digital verification infrastructure, and scaling blockchain-enabled sustainable debt markets.