Green Bond Market in the New Context: A Financial Bubble or an Effective Financing Tool?

Abstract

Ensuring economic growth in the 21st century is inextricably linked to attempts to address pressing human development challenges, including poverty and inequality, climate change, accelerating ecosystem degradation and other environmental concerns. The concept of corporate social responsibility (CSR) has gradually transformed into an ESG approach, which is largely synchronized with the internationally benchmarked Sustainable Development Goals. The growing popularity of this approach was also reflected in the development of the financial market and financial institutions, which responded with the first issue of green bonds in 2007. One of the drivers of the subsequent growth of this segment of the financial market was a high green premium, which persisted until the crisis events of the early 2020s. The challenges facing the global economy in 2022 had a negative impact on the dynamics and state of the green securities segment and led to the disappearance of the green premium in the fourth quarter of 2022. In the coming years, we can expect the market to recover, as well as its transition to a new state, including through changes in the structure of green bond issuers.