Nordic green bond issuers’ views on the upcoming EU Green Bond Standard

Abstract

The green bond market is growing and becoming increasingly important in green finance and for the transition to a low-carbon economy. Still, the green bond market is to a large extent unstandardised. There is no commonly agreed definition of the term ‘green’. This has been seen as one of the biggest challenges when it comes to the development of the green bond market. The need of a unified EU standard has been raised and as an effect the establishment of the EU Green Bond Standard is now in development. However, new standards might not only bring advantages, but also challenges. Striking the right balance of strictness might be hard. The research has been conducted through qualitative method with semi-structured interviews. Nine interviews were held during November and December 2020. The data was then analysed through thematic coding in order to find patterns of meaning. The results show that Nordic green bond issuers overall are positive towards the EU Green Bond Standard. The EU GBS has a good aim, to harmonise and enlarge the green bond market. However, the standard brings challenges that are to a large extent known challenges which the EU GBS aims to address, such as labour intensive reporting processes, lack of initiative and reputational risk. Also, it is argued that the standard is not fair and applicable for all the countries and companies. Countries national laws may not always go hand in hand with the standard. For example, the requirements for green buildings are seen as challenging in the Nordics. If these challenges are not taken into consideration, Nordic green bond issuers fear that the market will not grow, but instead decrease. Additionally, Nordic green bond issuers argue the adoption of the EU GBS is not a guarantee for issuers. Bigger institutes are seen to be early adopters. For other issuers investor requirement and positive impact on their company reputation is seen as the key drivers for adoption of the standard.