What EU's proposed green bond standards could mean for market - a podcast by S&P Global

The EU has proposed a European Green Bond Standard as part of its strategy to drive investment into sustainable finance and achieve net zero carbon emissions by 2050. The new rules will also aim to protect investors from greenwashing, which is when an investment is made to sound greener than it is.

Although they represent a tiny fraction of the overall debt market, green bonds — debt that finances environmentally friendly projects such as wind farms or solar power — have grown rapidly over the last eight years, from virtually nothing in 2012 to nearly $300 billion in 2020. The EU is counting on further growth in the market to meet the targets in its European Green Deal, designed to mobilize at least €1 trillion of sustainable investment over the next 10 years. The rules will be tougher than other existing green bond guidelines because issuers will have to prove their green bonds are financing projects in line with the EU's "green taxonomy," a dictionary of sustainable activities.

In this episode, we speak to Climate Bonds Initiative CEO Sean Kidney, who was part of an advisory group that helped shape the new rules. Regulation has “been right from the beginning, a feature of the development of the market. Issuers have followed the regulations, and it's grown to be a very large successful market,” he tells us.