“Greenwashing” Issuers Undermining Green Bond Market

About one third of issuers have seen no improvement in their environmental performance following initial green bond issuance, a report by the Hong Kong Monetary Authority (HKMA) has found. The report analysed 1,888 corporate green bonds issued by 643 listed companies between 2013 and 2021, collectively worth US$591 billion. “Some corporations merely use green bonds as a greenwashing tool, as reflected by a higher aggregate greenhouse gas (GHG) emission intensity,” the HKMA said. “This greenwashing behaviour might pose risks to financial stability, as well as impede the green bond market development and suffocate the progress in tackling climate change.” The report showed that some issuers are being penalised, as they are less welcomed by investors and thus less likely to issue green bonds again. “Even if greenwashing firms could re-issue green bonds, such a lukewarm reception from market participants would impose a higher cost on their re-issuance.” But the report confirmed that corporate green bonds can help to tackle climate change, as evidenced by the lower average aggregate GHG emissions intensity of issuers between 2013 and 2021.

 

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