GREEN BONDS – European Union legislation and comparison to self-regulation

Abstract

The pro gradu thesis discusses the regulation of green bonds, especially under which regulation the green bonds are regulated in European Union. The pro gradu thesis further presents the former self-regulation of green bonds and compares it to the European Union Regulation. The subject of whether the planned legal regulation is appropriate, taking into account the objectives set for the regulation and the resulting advantages and disadvantages is also touched on.

The new regulation is expected to have substantial effect on green bonds as it takes the requirements thereof to a next level and aims to avoid greenwashing by defining what can be regarded as being green. The core of the regulation is in taxonomy and disclosure obligations. The former self-regulation has been, for most parts, vague and clearly opened possibilities for greenwashing.

The research method in this thesis is the legal dogmatic method and comparative approach. The main sources are the preparatory works for the regulation, the regulation itself and the former self-regulation.

The thesis presents the relevant European Union legislation for green bonds and concludes that there are substantial differences when comparing to the self-regulation. The differences can be seen in how the proceeds of the funds are used, how the objectives of the bonds are evaluated and what information is required to be disclosed. Further, the European Union regulation is estimated to be effective for the objectives set out thereto and it is noted to be made in an efficient way.