The NZX describes a green bond as a bond where "proceeds are used to finance or refinance projects with clear environmental benefits".
A green bond market has been around since about 2007, the NZX said.
The Government said they were used for funding projects like renewable energy or reforestation.
"They are issued globally to support climate-friendly initiatives, including by the World Bank since 2008.
"Money raised from the bonds would be used to support projects that help reach the Government's net zero carbon target."
In a statement, Minister of Finance Grant Robertson said green bonds would help develop Aotearoa's sustainable finance market.
"Projects financed by the bonds will be subject to additional scrutiny and, over time, the project selection, evaluation, and reporting requirements will help to ensure high-quality projects with robust environmental outcomes are delivered," Robertson said.
"This is particularly important given the significant amount of investment that will be required by the Government to support the climate transition.
"There's now a substantial and growing investor demand for sovereign green bonds, reflecting an increase in the number of investors with a mandate to invest in green bonds."
In a statement, Minister for Climate Change James Shaw said issuing green bonds reflected the Government's commitment to accelerate investment in clean, climate-friendly projects.
"Reforming the financial system has been at the centre of our vision for building a low carbon economy since we came into Government. From the start we have known that we simply cannot address the climate crisis if capital is flowing in the opposite direction to where the world is heading," Shaw said.
"The creation of a green bond programme will add a new financing tool we can use to deliver the low carbon projects we need to meet our climate targets."
New Zealand Debt Management at the Treasury is leading work on the green bond programme.
Subject to market conditions and progress of establishment activity, final details of the green bond programme will be announced in mid-2022, followed by an inaugural issuance in late 2022.