Green Bond Principles Enhancing Disclosure in Corporate Green Bond Markets: A Legal Analysis

Abstract

Corporate green bonds are a financing mechanism used by corporations to fund their green and environmentally friendly projects, such as renewable energy. Indeed, the increasing growth of the corporate green bonds market has been accompanied by growing concerns relating to the integrity of the market and the quality of corporations' disclosure. Thus, the establishment of Green Bonds Principles (GBP) voluntary guidelines in 2014, was believed to enhance the quality of corporations' disclosure relating to their usage of green bonds. However, this paper has found that the extent of information disclosure the last edition of GBP set on corporations, is discouraging corporations, as well investors to issue or invest in corporate green bonds, furthermore, it has been found that obtaining the needed information is difficult under the GBP since it has failed to set clear standards and characteristics relating to green bonds and green projects. Within this context, the failure of implementing these two necessary elements has found to negatively affect the corporate green bonds market. Therefore, this thesis seeks to specifically focus on the information disclosure within the use of corporate green bonds, as well as the GBP’s guidelines. Specifically, this thesis argues that the GBP needs to be reformed in order to tackle the consequences that arise as a result of the lack of disclosure in using corporate green bonds. The thesis employs a doctrinal approach to analyse the effectiveness of GBP in enhancing corporations' disclosure, in which, corporate green bonds as well the market of it are being discussed firstly, followed by an analysis regarding the rationales behind the increasing issuance of corporate green bonds. Then, the paper discusses information disclosure within the use of corporate green bonds and the harmful consequences of the lack of disclosure, followed by an examination of the GBP's approach in enhancing disclosure. Finally, this thesis proposes several improvements that could be applied to enhance the GPB's disclosure approach.