A Legal Analysis Of Terms and Conditions For Green Bonds : Focus on the Financial Markets in the Nordics

• The global financial system needs to be aligned with the energy transition to alow-carbon future. Green bonds, i.e. bonds specifically earmarked to be usedfor climate and environmental projects, issued by public and private issuers areimportant for funding climate and sustainable projects. However, although thegreen bond market has shown exponential growth in recent years, it still doesnot account for more than around 2% of global bond issuances in the last twoyears.1 The purpose of this paper is to analyse and discuss if the Swedish, Finnishand Danish green bond markets (here the Nordic green bond market2) couldbe made more effective by strengthening the legal contracts and if, and to whatextent, legal regulation is required and desirable. Effectiveness is here defined as facilitating for an increased issue of green bonds, without compromisingthe integrity of the bonds (“greenwashing”). The paper includes a review andanalysis of the contract documentation of the issuers on the Nordic green bondmarket, a study that has not been made before. The issuers’ impact reporting ofgreen bonds is also analysed, as impact reporting is central for the transparencyof green bonds. Ongoing EU regulatory and related initiatives that may affectthe green bond market are discussed. The research indicates that the introduction of “green” undertakings in the contracts would not make the green bondmarket more effective. Regulation should support unification and transparency,but needs to be flexible and non-exclusive, or it could hinder growth and innovation of the market, and increase the risk for greenwashing.

Ämnesord

SAMHÄLLSVETENSKAP  -- Juridik -- Juridik (hsv//swe)

SOCIAL SCIENCES  -- Law -- Law (hsv//eng)

Nyckelord

Green bonds

climate change

legal contracts

green bond frameworks

impact reporting

Law

Rättsvetenskap

Publikations- och innehållstyp

ref (ämneskategori)

art (ämneskategori)