Green bonds are a critical tool for financing sustainable projects, yet their effectiveness depends on robust regulatory frameworks. The European Union (EU) has taken a significant step with the European Green Bond Regulation (EUGB Regulation), aiming to enhance transparency, combat greenwashing, and align green bonds with the EU Taxonomy. However, the voluntary nature of the commitments enshrined in the EUGB Regulation, along with the interpretational ambiguities linked to the EU Taxonomy, may hinder adoption and market impact. This paper critically examines the EUGB Regulation, assessing its potential and limitations. It first explores the regulatory context surrounding the EU green bond market, highlighting the fragmented framework preceding the EUGB Regulation. It subsequently identifies potential barriers to the EUGB Regulation’s adoption by issuers. To strengthen oversight, the study proposes a complementary technical and advisory role for the European Securities and Markets Authority (ESMA), the European Central Bank (ECB), and the European Investment Bank (EIB), leveraging their expertise to enhance enforcement and market confidence. Furthermore, the paper advocates integrating climate justice into the regulatory framework. A fair burden-sharing mechanism among Member States could ensure equitable green finance distribution, aligning the EUGB Regulation with the EU’s Just Transition Mechanism. The contribution concludes that while the EUGB Regulation represents progress, refinements - including financial incentives and stronger enforcement - are necessary to maximize its impact. Strengthening oversight and incorporating social equity considerations could transform the regulation into a key driver of both market efficiency and climate justice in the EU’s green transition.
Chiara Treglia (Thu,) studied this question.