Mitigating the effects of climate change is a costly affair, as it would require nations to spend trillions of dollars in order to upgrade their infrastructure and move towards a sustainable and low-carbon economy. Public funds alone won’t suffice as investment from the private sector remains essentialin order to meet the enormous funding needs. In order to attract private investment into programs aimed at adaptation and mitigation of climate change, the European Investment Bank in 2007 issued the first ever climate bond to mobilize funds in order to invest in renewable energy projects across Europe. The climate bonds, later dubbed as green bonds, have grown rapidly in the last one decade and may well be able to meet the enormous funding needs required to mitigate the effects of climate change. The following article, thus, aims to highlight the potential of green bonds as a catalyst for sustainable development and explains how its potential can be untapped by removing a few bottlenecks that may hinder its growth and potential in the long run.