THE ROLE OF MARKET STANDARDS IN THE LEGAL REGULATION OF GREEN BONDS

Abstract

The article sets out a comprehensive legal analysis of the leading market standards in the area of green bond issuance, in particular the Climate Bonds Standard and the Green Bond Principles. The author examines the historical background of the genesis of green bond market standards in the context of the formation and development of the global market for green bonds as instruments for financing sustainable development projects. It is established that the development of the said standards was a response by debt capital market participants to the need to unify the criteria for projects and assets eligible for financing using green bond proceeds, the requirements for the use and management of such proceeds, the guidance on issuer reporting, as well as to minimise greenwashing risks and enhance investor confidence in green bonds. The article outlines the key requirements of the Climate Bonds Standard, particularly with regard to eligibility criteria for projects and assets, sector-specific criteria, funds management procedures, reporting obligations, and mandatory external verification involving approved verifiers. The provisions of the Green Bond Principles have been summarized, and the key compliance requirements under each of the four core components of green bond issuance have been analysed. It is emphasised that the Green Bond Principles are recommendatory in nature, and compliance with this market standard largely depends on the issuer’s discretion. The significant influence of the reviewed green bond market standards on the development of regional and national legal regulation governing green bonds has been acknowledged. Potential directions for further academic research have been outlined, in particular regarding the assessment of the degree of compliance of the laws of Ukraine in the area of green bonds with the requirements of the generally accepted market standards, the identification of gaps in the legal regulation, the preparation of proposals for improvement of the regulation, aimed at enhancing legal certainty, preventing greenwashing, and strengthening the protection of investors’ rights and legitimate interests.