Green Bonds: Opportunities and Challenges for Reconciling Ethics and the International Financial System

Climate change is one of the most pressing challenges of the world and mankind, in general, at the present time. The most frequent occurrence and intensity of extreme weather events along with the increase of carbon dioxide particles and other greenhouse gases (GHGs) in the atmosphere have resulted in an escalation of economic and political tensions between and within states, opening up new sources of instability in the contemporary international order. Faced with the need to obtain foreign exchange to honor their international financial liabilities and the failure of developed countries to meet climate finance commitments, a significant number of developing states have been urged to deepen unsustainable production structures, limiting the possibility of an effective transition on a global scale. All this results in a reinforcement of the climate and sovereign debt crises. In recent years, innovative instruments have been developed in search of scaling up the resources allocated to the fight against climate change. Within this incipient trend, green bonds stand out as specific instruments oriented to finance certified climate-sustainable projects. This chapter aims to analyse the opportunities and challenges presented by green bonds in bridging the financial and ethical worlds. Based on this main objective, this chapter attempts to contribute to the design and implementation of international and national regulatory frameworks for green bonds and “labelled bonds”, in general.