Green Bonds: Legal and Policy Issues

Abstract

The market for green bonds has grown rapidly in recent years. This has resulted in increased attention on legal and policy issues associated with green bonds. These issues are the focus of this article. The article first describes key aspects of the green bond market including the nature and role of green bonds. It then discusses the main features of green bonds and the green bond market, including their benefits, cost and the role of green bond standards. The final section of the article examines selected issues, including various aspects relating to ‘greenwashing’ – the practice of falsely attributing environmentally positive credentials to a bond claimed to be ‘green’. Other issues discussed include pressures to relax green bond standards arising from demand for green bonds outstripping supply, and the position applying in cases of ‘green defaults’ – where the green promises made in relation to a bond are not fulfilled.

Keywords: green bonds, corporate finance, climate and environmental impact finance