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The European Green Bond Standard - How Could Its Introduction Change the Existing German Green Bond Market and Lead to More Private Investments in Green Projects in the Future?

  • In the context of the global climate crisis, socially responsible investing has gained momentum in the financial market. One of its objectives is the achievement of a positive environmental impact. Among the instruments used for this purpose are green bonds. These are fixed-income instruments whose proceeds may only be used for green activities. To this point, market-based standards aimed at establishing uniform definitions of what constitutes “green” have strongly contributed to the development of the green bond market. In order to further promote the issuance and credibility of green bonds and exploiting their financing potential, the European Commission has proposed the introduction of a European Green Bond Standard. This thesis examines how an introduction of the European Green Bond Standard could impact the existing German green bond market and lead to more private investments in green projects in the future. To address this question, information from an extensive literature review as well as quantitative data from Refinitiv EIKON's Green Bond Guide was used. For the German green bond market to grow, in particular an increased involvement of the private sector is essential. This thesis finds that the current draft of the European Green Bond Standard offers great potential in this respect. Through increased transparency and assurance, increased demand as well as associated reputational benefits and the possibility to use targeted policy incentives it has the potential to increase the attractiveness of green bond issuance for the private sector and thus induce more issuances. An extension of the grandfather clause, which is currently under discussion, could underpin this even further.

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Author:Pia Paulina Heinecke
Advisor:Michael Lederer
Document Type:Bachelor Thesis
Year of Completion:2022
Granting Institution:Hochschule Furtwangen
Release Date:2022/08/31
Tag:European green bond standard; Green bond; Socially responsible investing
Degree Program:IBM - International Business Management
Functional area:Finance & Accounting
Licence (German):License LogoUrheberrechtlich geschützt