MINIMIZING RISKS IN THE GREEN BOND MARKET

Authors

DOI:

https://doi.org/10.15407/economyukr.2025.05.035

Keywords:

green bonds; green bond market; “green” investors; investment risks; reputational risks; greenwashing; environmental and social risk management.

Abstract

The risks in the green bond market are studied. It is established that there is a risk associated with the instability of debt and the overall level of risk in the country, which depends, among other things, on economic, political, legal and security factors. At the same time, environmental and social risks may arise as a result of the impact of projects financed with proceeds from green bond issuance, as well as the risk of greenwashing associated with misleading positioning of securities. It is proposed to divide the risks in the green bond market into two groups: investment and reputational.

The Russian aggression against Ukraine has increased investment risks and made the vector of the country's economic development unpredictable. The war has increased the debt burden and unbalanced the budget. To minimize investment risks in the Ukrainian green bond market, it is necessary to address the debt issue in the energy sector, ensure a stable regulatory environment and provide appropriate support to investors. Close cooperation with international organizations and financial institutions will help strengthen the resilience of green bonds.

The high yield of Ukrainian securities may interest investors in investing in the “green” segment. Their trust may be affected by factors related to the associated negative environmental and social impact of projects financed with green bond proceeds, as well as misleading overstatement or distortion of their intended environmental benefits. To prevent reputational risks, it is important to preclude the opaque use of proceeds from green bond issuance and prevent them from being directed to financing projects for which there is insufficient evidence of their future positive impact.

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Published

19.05.2025

How to Cite

FROLOV, A. (2025). MINIMIZING RISKS IN THE GREEN BOND MARKET. Economy of Ukraine, 68(5 (762), 35–52. https://doi.org/10.15407/economyukr.2025.05.035

Issue

Section

Sustainable and inclusive development, environmental economics, and “green transition”