Green Bonds: Between economic incentives and eco-change

Abstract

As the investor base committed to financing sustainable companies in an attempt to combat the climate crisis expands, green financial products have become more attractive to issuers, corporate and sovereign alike. As a result, the EU is attempting to create favourable market conditions which mobilise the allocation of private capital for investments that reduce the contribution to climate change. As part of the EU Commission’s Action Plan for Sustainable Finance, it intends to create Green Bond Standards which aim to support the transition to greener securities investments. As a foundation, we provide an overview of the green bond market development. We then consider investment challenges such as incentivisation and transparency and discuss whether the Green Bond Standards shall likely resolve these issues. Furthermore, we confer that enforceability of current green securities regulations is weak to non-existent and propose possible policy approaches which address these issues.

Corporate green bonds and carbon performance: An economic input–output life cycle assessment model‐based analysis

“…Second, green bonds can be a cheaper source of financing (Liaw, 2020) and can diversify the financing methods of companies, particularly in those with better environmental performance and higher credit ratings (Li et al, 2020). Third and last, some firms may disguise themselves as having a green image through the issuance of green bonds and make misleading environmental commitments using selective disclosure, which is called “ greenwashing ” behavior (Berrone et al, 2017; Hoinaru et al, 2020).…”