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ARTICLE · 28 OCTOBER 2019

Green Bonds Series: Part 4 – When green bonds go brown

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Part 4 of this series looks at consequences for green bonds that fail to deliver on their promised 'green' investment.

AustraliaFinance and Banking
Clare Corke
Clare Corke
Julie Myers
Julie Myers
Cameron Busch
Cameron Busch
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In this article, part 4 of our series on green bonds, we take a look at the consequences for green bonds which fail to deliver on their promised 'green' investment.

Since the first issue of a green bond in 2007, the terms and conditions of green bonds have been silent or expressly excluded the right of investors in the event of a green-default. This was to encourage the growth of the green bond market. However, it did nothing to support the 'green' credibility of green bonds. This may be about to change.

Investors are now starting to ask for contractual protections linked to 'greenness', and issuers, following the lead of the green loan market, are more comfortable accepting this as a precondition to accessing green finance.

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