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Transforming Green Bond Markets

Author: Juan Antonio Ketterer

Publisher: Inter-American Development Bank

Published: 2019-09-27

Total Pages: 36

ISBN-13:

Despite exhibiting remarkable growth, the green bond market still represents less than 1 percent of the global bond market. This paper identifies two challenges that might slow the adoption of green bonds and presents a menu of responses that policymakers, regulators, and public financial institutions can use to offset these challenges. Specifically, it explores two key dimensions: (i) the risk profile of the green bond instrument and (ii) the transaction costs associated with issuance of and reporting on green bonds. New approaches to risk design and technology-based approaches are essential to untap the potential of green bond markets, particularly in Latin America and the Caribbean and other developing regions. The incorporation of financial mechanisms such as covered bonds and guarantees can adequately address the risk of the issues, making the market more attractive for investors. Enhanced regulation and education and leveraging efficiencies of new technologies such as distributed ledger technologies can substantially reduce monitoring and reporting costs, while improving transparency in the use of proceeds and market integrity.

Green Finance and Investment Mobilising Bond Markets for a Low-Carbon Transition

Author: OECD

Publisher: OECD Publishing

Published: 2017-04-19

Total Pages: 136

ISBN-13: 9264272321

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This report describes the development of the green bond market as an innovative instrument for green finance, and provides a review of policy actions and options to promote further market development and growth. Since 2007-08, so-called “green bonds” have emerged and the market has risen from ...

Sovereign Green Bonds: A Catalyst for Sustainable Debt Market Development?

Author: Gong Cheng

Publisher: International Monetary Fund

Published: 2024-06-14

Total Pages: 29

ISBN-13:

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In traditional bond markets, sovereign bonds provide benchmarks and serve as catalysts for the corporate bond market development. Contrary to the usual sequence of bond market development, sovereign issuers are latecomers to sustainable bond markets. Yet, our empirical study finds that sovereign green bond issuance can have quantitative and qualitative benefits for the development of private sustainable bond markets. Our results suggest that both the number and the size of corporate green bond issuance increase more in a jurisdiction after the sovereign debut. The results are more pronounced in countries with stronger climate policies. Sovereign green bond issuance also improves the quality of green verification standards in the corporate bond market more generally, consistent with the aim of fostering third-party reviews and promoting best practice in green reporting and verification. Finally, our work provides evidence that the sovereign debut increases liquidity and diminishes yield spreads of corporate green bonds in the same jurisdiction.

Renewable energy finance: Green bonds

Author: International Renewable Energy Agency IRENA

Publisher: International Renewable Energy Agency (IRENA)

Published: 2020-01-01

Total Pages: 31

ISBN-13: 929260256X

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Renewables have emerged as a major recipient of green bond proceeds. This brief highlights the need for more green bonds to drive sustainable, climate safe, energy finance.

Greening the Bond Market

Author: David Ramos Muñoz

Publisher: Springer Nature

Published: 2023-10-19

Total Pages: 320

ISBN-13: 3031386922

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Green bond issuance has surged in recent years in response to growing investor appetite and borrowers' needs as they embark on the sustainability transition. The EU leads the way, with over 40% of all sustainable bond issuances denominated in euro. The EU’s 'Regulation on European Green Bonds and optional disclosures for bonds marketed as environmentally sustainable and sustainability-linked bonds’ is the first comprehensive legislative text covering such issuance, and a cornerstone of EU’s Sustainable Finance strategy. This book explores in an interdisciplinary way the challenges and opportunities of green bonds and sustainable finance from a legal, regulatory and economic perspectives. First, it analyses green bonds as a new financial instrument in the context of the existing capital markets law. Second, it studies green bond impact on the market and on investor protection. Third, it assesses green bonds’ relevance for prudential supervision and central banking. The variety of viewpoints ensures a highly comprehensive analysis of green bonds’ impact in a European and global context.

Sovereign Climate Debt Instruments

Author: Ando Sakai

Publisher: International Monetary Fund

Published: 2022-07-07

Total Pages: 28

ISBN-13:

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Financial markets will play a catalytic role in financing the adaptation and mitigation to climate change. Catastrophe and green bonds in the private sector have become the most prominent innovations in the field of sustainable finance in the last fifteen years. Yet, the issuances at the sovereign level have been relatively recent and not well documented in the literature. This Note discusses the benefits of issuing these instruments as well as practical implementation challenges impairing the scaling-up of these markets. The issuance of these instruments could provide an additional source of stable financing with more favorable market access conditions, mitigate the stress of climate risks on public finances and facilitate the transition to greener low-carbon economies. Emerging market and developing economies stand to benefit the most from these financial innovations.

What Future for the Green Bond Market? How Can Policymakers, Companies, and Investors Unlock the Potential of the Green Bond Market?

Author: Pauline Deschryver

Publisher:

Published: 2020

Total Pages: 26

ISBN-13:

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The green bond market is attracting new issuers and a more diversified base of investors. However, the size of the green bond market remains small compared to the challenges it is meant to address and to the overall traditional bond market. This paper is based on a unique methodology combining an extensive literature review, market data analysis, and interviews with a large spectrum of green bond market participants. We identify the current barriers explaining the lack of scalability of the green bond market: a deficit of harmonized global standards; risks of greenwashing; the perception of higher costs for issuers; the lack of supply of green bonds for investors; and the overall infancy of the market. This paper makes several recommendations to overcome these obstacles and unlock the full potential of green bonds to finance sustainability goals.

Detailed Guidance for Issuing Green Bonds in Developing Countries

Author: Asian Development Bank

Publisher: Asian Development Bank

Published: 2021-12-01

Total Pages: 89

ISBN-13: 9292692852

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This guidance note aims to help bond issuers and their advisors to understand the process and key considerations for a successful green bond issuance. Demand for green bonds and other sustainable finance products is increasing rapidly, and issuers are seeing an opportunity to be part of the green bond market. This publication covers all the steps required to follow best practices in labeling bonds as green. It includes examples, links to further details, and key resources for green bond issuers and their deal teams.

Transforming Climate Finance and Green Investment with Blockchains

Author: Alastair Marke

Publisher: Academic Press

Published: 2018-06-28

Total Pages: 370

ISBN-13: 0128144483

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Transforming Climate Finance and Green Investment with Blockchains establishes and analyzes the connection between this revolutionary technology and global efforts to combat climate change. The benefits of blockchain come through various profound alterations, such as the adoption of smart contracts that are set to redefine governance and regulatory structures and transaction systems in coming decades. Each chapter contains a problem statement that describes the challenges blockchain technology can address. The book brings together original visions and insights from global members of the Blockchain Climate Institute, comprising thought leaders, financial professionals, international development practitioners, technology entrepreneurs, and more. This book will help readers understand blockchain technology and how it can facilitate the implementation of the Paris Agreement and accelerate the global transition to a green economy. Provides an authoritative examination of this emerging digital technology and its implications on global climate change governance Includes detailed proposals and thorough discussions of implementation issues that are specific to green economy sectors Relates innovative proposals to existing applications to demonstrate the value add of blockchain technology Covers blockchain for the smarter energy sector, for fraud-free emissions management, to streamline climate investments, and legal frameworks for blockchain-based climate finance

Greeniums in Sovereign Bond Markets

Author: Monika Grzegorczyk

Publisher:

Published: 2022

Total Pages: 0

ISBN-13:

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The total market value of green bonds exceeded half a trillion dollars in 2021 and will increase to $1 trillion by the end of 2022. The growing European green sovereign bond market has a value of close to €147 billion at issuance. We study whether investors price green sovereign bonds differently to normal sovereign bonds. We do not expect to find a so-called 'greenium': the promise attached to green sovereign bonds is rather loosely defined and green and normal sovereign bonds are both backed by the full faith and credit of their respective governments. However, when systematically matching green and normal sovereign bonds using a number of criteria, including date of issuance and maturity, a small greenium can be measured. More research is needed to understand why rational investors do not arbitrage away this greenium.