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

Abstract

article what future for the green bond market? how can policymakers, companies, and investors unlock the potential of the green bond market? pauline deschryver * and frederic de mariz * school of international and public affairs, columbia university, new york, ny 10027, usa * correspondence: pauline.deschryver@columbia.edu (p.d.); fm2136@columbia.edu (f.d.m.) received: 19 december 2019; accepted: 17 march 2020; published: 24 march 2020 abstract: 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. keywords: green bonds; sustainable investing; esg; impact measurement; socially responsible banking 1. introduction green bonds and climate bonds have received increasing attention over the past …

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