Most mainstream investors like going green as long as they don’t have to pay a premium. That reasoning helps explain the crossover success of green bonds, high-grade fixed-income securities whose proceeds fund projects that fight climate change. In February, International Finance Corp., the Washington-based World Bank Group’s private sector division, launched its latest green bond offering — at $1 billion, the market’s biggest yet. The three-year, triple-A-rated bonds, underwritten by Citigroup, J.P. Morgan and Morgan Stanley, were offered at a yield 15 basis points higher than comparable U.S. Treasuries.

Asset manager BlackRock bought its first green bonds in April 2010 and was among the 56 investors in the IFC issue, which was 80 percent oversubscribed. The main driver of $3.8 trillion BlackRock’s investment in green bonds is client demand, largely from corporate and public institutions, says....