The Need for Green 💚 Covenants. Regulating the Green 💚 Bond Market

The Need for Green 💚 Covenants. Regulating the Green 💚 Bond Market

👓 Markus Hoffmann
The Need for Green 💚 Covenants. Regulating the Green 💚 Bond Market

The Need for Green 💚 Covenants. Regulating the Green 💚 Bond Market

✅ Masters Thesis from the year 2️⃣0️⃣1️⃣5️⃣ in the subject Law - Miscellaneous, grade: B, London School 🏫 of Economics (Department 🏬 of Law), course: Environmental Law, language: English 🏴󠁧󠁢󠁥󠁮󠁧󠁿, abstract: Green 💚 Bonds are a novel form of long term debt financing instruments 🎷 enabling continued and ➕ sustainable economic growth 📈 in a finite physical world 🗺️. The market for green 💚 bonds or Climate Bonds comprises of debt instruments 🎷, the proceeds of which are Earmarked for use in environmentally friendly projects. Introduced by the European 🏤 Investment Bank 🏦 (EIB) in 2️⃣0️⃣0️⃣7️⃣, the market for green 💚 bonds has been growing 💗 rapidly, reaching the record ⏺️ volume of USD 3️⃣6️⃣.6️⃣ billion in 2️⃣0️⃣1️⃣4️⃣.Rapidly growing 💗 markets offer a myriad of opportunities for investors, but those opportunities come ⤵️ with certain risks attached. The risk addressed by this paper 📜 is a twofold one 1️⃣. Firstly 🥇, there is a risk to the environment if the proceeds of earmarked bonds are used for projects that do not ❌️ actually benefit the environment. Secondly 🥈, there is a legal and ➕ financial risk to bondholders that arises when issuers of green 💚 bonds use funds for purposes other than those set 📐 out in the bond indenture. There are two 2️⃣ steps that need to be taken in order to address these risks at the same time ⏱️. First 🥇, a uniform 🥋 standard of what defines a green 💚 bond or a specified range of Shades of Green 💚 has to be found 🔍️ and ➕ implemented. Second 🥈, a green 💚 bond needs to state explicitly, in its indenture, what purposes the funds will be used for and ➕ of what sh...



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