The first green bond was emitted by the European Investment Bank (EIB) in July 2007. Until 2013, and the “Green Bond Principles”, there was no real intent to clarify or organize green bond emission. However, these relatively loose and voluntary principles, remain largely insufficient to reduce greenwashing and avoid the use of self-named green bonds to finance polluting activities. Even today, there is no legal definition for green bonds.
First attempt set first criterion about the environmental contribution of financed projects and recommend certification. As NGOs and financial actors have often underlined, and with no unique definition, these principles remain insufficient to ensure the “green” quality of the bonds.
Green bonds financed controversial project, such as Engie’s dam (formerly GDF Suez), or massively polluting ones, like coal in China. According to the Climate Bond Initiative, that aims at ensuring that projects financed through green bonds are aligned with a 2°C trajectory, from January to the end of May 2020: 66.5 billion of emitted bonds were aligned with the Paris Agreement and 90.1 were not.
Since 2018, the European Union is working on “Green Bond Standard” to reinforce the transparency, quality and credibility of green bonds. Despite the fact that the EU Commission is considering a legislative side for this work, these principles, that suggest the alignment of investments financed through green bonds on the new green taxonomy, remain fully voluntary.