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The green bond market is expanding rapidly but needs to be measured more accurately
[En plein essor, le marché des obligations vertes nécessite d’être mieux mesuré]

Author

Listed:
  • Pierre BUI QUANG
  • Jean-Brieux DELBOS
  • Simon PERILLAUD
  • Clément BOURGEY

Abstract

Green bonds differ from conventional bonds in that they are used to finance projects expected to have environmental benefits. In the four years since the Paris Climate Agreement (2015), the green bond market has grown rapidly. However, it is still far below the scale needed to finance the ecological transition. In addition, in the absence of a precise legal definition of the assets that can be financed, issuers run the risk of being suspected of greenwashing, while investors face increased information costs in order to determine the type of project they are funding. In response, European institutions have begun discussions on a classification system (taxonomy) for sustainable economic activities, which would be a first step towards an official definition. The statistical evaluation of green financing is also made difficult by the lack of easily accessible data on the sectors that are the final beneficiaries of the financed projects. Bridging these gaps would considerably improve the quality of analyses on the financing of the transition to a sustainable economy. Les obligations vertes se distinguent des obligations classiques par le bénéfice environnemental attendu du projet financé. Depuis quatre ans, dans le sillage de l’accord de Paris sur le climat (2015), le marché des obligations vertes connaît une forte expansion. Celle-ci reste cependant en deçà des besoins de financement de la transition écologique. De plus, en l’absence de définition juridique précise des objets finançables, l’émetteur encourt un risque de suspicion d’écoblanchiment (greenwashing) tandis que l’investisseur doit accroître ses coûts d’information sur la nature du projet. Les institutions européennes ont, en conséquence, entamé des discussions sur un système de classification (une taxonomie) des activités économiques durables, étape préalable à une définition officielle. L’évaluation statistique des financements verts bute également sur l’absence d’informations aisément accessibles sur les secteurs finaux bénéficiaires des projets financés. Combler ces lacunes permettrait d’améliorer sensiblement la qualité des analyses sur le financement de la transition vers une économie durable.

Suggested Citation

  • Pierre BUI QUANG & Jean-Brieux DELBOS & Simon PERILLAUD & Clément BOURGEY, 2019. "The green bond market is expanding rapidly but needs to be measured more accurately [En plein essor, le marché des obligations vertes nécessite d’être mieux mesuré]," Bulletin de la Banque de France, Banque de France, issue 226.
    • Handle: RePEc:bfr:bullbf:2019:226:06
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    References listed on IDEAS

    as
    1. Febi Wulandari & Dorothea Schäfer & Andreas Stephan & Chen Sun, 2018. "Liquidity Risk and Yield Spreads of Green Bonds," Discussion Papers of DIW Berlin 1728, DIW Berlin, German Institute for Economic Research.
    2. Febi, Wulandari & Schäfer, Dorothea & Stephan, Andreas & Sun, Chen, 2018. "The impact of liquidity risk on the yield spread of green bonds," Finance Research Letters, Elsevier, vol. 27(C), pages 53-59.
    3. Maria Jua Bachelet & Leonardo Becchetti & Stefano Manfredonia, 2019. "The Green Bonds Premium Puzzle: The Role of Issuer Characteristics and Third-Party Verification," Sustainability, MDPI, vol. 11(4), pages 1-22, February.
    4. Torsten Ehlers & Frank Packer, 2017. "Green bond finance and certification," BIS Quarterly Review, Bank for International Settlements, September.
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    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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