Green, Greener, Not Green Enough? Institutional Forces Driving the European Green Bond Market

Along with other environmental initiatives, the European Green Bond Standard can raise the impact of green bonds by enhancing a common understanding, transparency and credibility, though it may also limit green bond market growth due to a potential rigidness. Although standards and regulations are necessary for impactful market growth, ensuring sustainable strategic alignment will be the crucial point. This necessity for strategic alignment manifests the importance of the corporation’s normative value system in sustaining an ecological transition. By setting alignment requirements for bond issuers’ legitimacy through institutional forces, coercive, normative and mimetic pressure on issuers may enhance the overall effectiveness of green bonds to facilitate the transition to a more green and equitable future.