Green Bonds, Empty Promises

Abstract

102 n.c. l. rev. 131 (2023) green bonds, empty promises* quinn curtis, w. mark c. weidemaier & mitu gulati** we examine the legal terms in the market for green bonds, debt instruments in which proceeds are earmarked, directly or indirectly, for projects with a positive environmental impact. utilizing a sample of nearly 1000 bonds over the entire history of the market and supplementing this data with interviews with over fifty market participants and policymakers, we find a concerning lack of enforceability of green promises. moreover, these promises have been getting weaker over time. green bonds often make vague commitments, exclude failures to live up to those commitments from default events, and disclaim an obligation to perform in other parts of the document. these shortcomings are known to market participants. yet, demand for these instruments has been growing. we ask why green bond promises are so weak, while the same investors demand strong promises from the same issuers in other settings. ii. introduction.............................................................................. 132 background and expectations ..................................... 138 i. a. why are green bonds green? and why issue them? ............ 138 b. the credibility of green promises ....................................... 141 the state of the market for green bonds ................ 145 a. description of the data ...................................................... 145 b. green bonds lack …

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