A Comparative Study on the Development of Green Bond Markets in East Asia

• In Event: Environmental and Gender Politics in Taiwan

Abstract

Climate change stands as the most urgent issue in global governance, compelling entities beyond nations - businesses, investors, financial institutions, and NGOs - to invest in combating this crisis. As these entities endeavor to navigate the increasingly complex finance landscape, green finance has emerged as a critical mechanism, facilitating investments that contribute positively to sustainable environmental development.

Green bonds, an embodiment of green finance, have seen rapid growth, with the assurance of utilizing raised funds for environmentally beneficial projects. Nevertheless, a lack of a uniform definition has given rise to greenwashing phenomena and associated risks, heightening investors' scrutiny of the true environmental impact of these bonds. In response, two universally recognized green bond standards - the Green Bond Principles (GBP) and the Climate Bonds Standard (CBS) - have been established, albeit the heterogeneity in transnational governance and green bond market development still exists.

This study focuses on East Asia - Japan, Taiwan, and South Korea specifically - analyzing the notable disparities in the quality and quantity of their green bond development despite similar industrial growth strategies. With a fewer number of green bond issuers and CBS-compliant bonds, Taiwan and South Korea trail Japan significantly. Employing process tracing, this research elucidates the puzzle, attributing the variances in the East Asian green bond market development to the varying degrees of each country's engagement with transnational climate governance. The findings have implications for the future development of green finance and climate change mitigation efforts globally.

Authors

• Jiun-Da Lin, National Taiwan University

• Yukino Kobayashi, National Taiwan University