A Chance for the EU to Become the Green Bond King

The green bond market has blossomed, with annual global issuance growing fivefold in the past half-decade. To become a fully fledged asset class, it needs a benchmark borrower. That’s a role the European Union is well placed to fill by selling environmentally friendly debt as it accelerates its bond-issuing program to fund the bloc’s pandemic recovery.

The EU will have to substantially step up its bond-market borrowing to finance the 750 billion-euro ($885 billion) package approved last month to help its 27 members weather the coronavirus’s economic aftershocks. As a top-rated issuer, it can foster the market for green securities by channeling as much of that issuance as possible to the nascent sector. Doing so would reinforce the lead its taken in encouraging financial firms to acknowledge their long-term responsibilities as the guardians of environmental as well as monetary wealth.