Turning green into gold - How to make the European green bond standard fit for purpose

Open Access

Abstract

Green bonds can play an important role when it comes to financing a more sustainable European economy. However, lack of transparency in today's market for them prevents green bonds from achieving their full potential. The European Commission's proposal for a European green bond standard (EuGBS) does little to fight greenwashing and foster investor confidence. To establish the EuGBS as the new gold standard, the European Parliament and EU Council should improve it in three respects. They should (i) strengthen its environmental credentials, (ii) regulate the entire green bond market and not just the EuGBS niche, and (iii) ensure the enforceability of investor rights. That way, a credible EU public standard can become the new benchmark on financial markets and make a positive impact on the environment.