Removing Barriers in the Ukrainian Green Bond Market

Abstract

Introduction. The transition to a climate-neutral and sustainable economy for Ukraine, as for most countries, will require attracting an “unprecedented” level of funding to support measures to combat climate change. There is a strong demand for green bonds from socially responsible investors, which allows issuers to finance measures to reduce environmentally harmful emissions. And for Ukraine, the development of this market is becoming relevant, firstly, for the fulfillment of climate obligations, and secondly, for the post-war recovery of Ukraine. But the issue of the development of this market for Ukrainian post-war recovery according to transparent “green” principles remains understudied.

Methods. During the writing of the article were used: the method of theoretical generalization (for the study of scientific works of foreign and domestic scientists related to the development of the green bond market); analytical method (to study barriers to the green bond market expansion, entry into the international and local green bond market of potential issuers and socially responsible investors); logical method (for forming conclusions).

Results. For Ukraine, the mission of developing the green bond market is two-sided. Firstly, this market provides an opportunity to close the investment gap on the country’s climate obligations in order to make a fair green transition. On the other hand, it is lucky chance to conduct reconstruction of the country according to internationally recognized “green” principles, which will contribute to increasing the confidence of socially responsible investors. The article examines the legal framework for the Ukrainian green bond market. It was established that the international principles of issuing green bonds, which are pointed in the regulatory acts of Ukraine, strengthen the culture of “environmentalism”, transparency, accountability, and consistency of actions. Barriers to entering the international green bond market for potential issuers and the local market for institutional investors have been identified. Proposals for overcoming existing barriers have been developed. Practical recommendations for the Ukrainian green bond market development strategy are formed.

Discussion. The green transition, which will be accompanied by a large-scale ecological transformation of the energy sector and the introduction of energy-saving measures in various industries, will require the development of incentives for socially responsible investors. Examples of providing tax credits to investors are already found in global practice, which opens up a wide field for further scientific research.