How does the JRC support the EU Green Bond Standard
After the exponential growth experienced in recent years, green bonds are considered the star of sustainable capital markets, and likely to remain so for the years to come. The European Union is having a leading role in bridging the investment gap to meet the EU Green Deal's climate and environmental goals. This requires mobilising an unprecedented amount of resources and deploying adequate financial instruments.
What role do green bonds play?
The Commission seeks to raise 30% of Next Generation EU – the recovery instrument worth €750 billion – through the issuance of green bonds and to use the proceeds to finance green policies. European Commission President Ursula von der Leyen voiced this ambition in her 2020 State of the European Union speech. At the same time, the Commission proposal for an EU Green Bond Standard aims to enhance the transparency, comparability and credibility of the green bond market for both borrowers and investors, and, ultimately, to foster its growth.
JRC contributions to policy
In its work in support to policy, the JRC has developed extensive knowledge and expertise on green bonds and the green bond market. Examples of JRC scientific contributions include:
- analysis of pricing on primary markets, which shows that green bonds can be a cheaper source of finance than conventional bonds for companies and governmental issuers;
- assessment of the effectiveness against climate change, according to which green bond financing is proving effective in promoting more sustainable, less carbon-intensive activities;
- Investigation of bond portfolios held by institutional investors, which documents that green bonds were more resilient than conventional bonds during the COVID-19 outbreak.
In addition to developing original research that fills important knowledge gaps in the academic literature, the JRC also monitors green bond issuances in the EU member states, including by governments, to assess how debt capital markets are contributing to financing the green transition.