Catalyzing the growth of green bonds: a closer look at the drivers and barriers of the Canadian green bond market
Sustainability Accounting, Management and Policy Journal
ISSN: 2040-8021
Article publication date: 29 February 2024
Issue publication date: 30 April 2024
Abstract
Purpose
This paper aims to examine the Canadian financial sector’s reaction to opportunities and risks created by the green bond market in a low-carbon and climate-resilient (LCR) economy.
Design/methodology/approach
The authors used a concurrent mixed methodological approach that undertakes an online survey and semistructured interviews with critical green bond market stakeholders.
Findings
The most significant market driver in Canada is the reputational benefit for stakeholders, i.e. its ability to meet the high demand for sustainable finance and the marketing potential of its green credentials. The major market barriers are transactional costs, i.e. additional tracking required for reporting purposes, lack of market liquidity and identification of environmental impact or additionality. Canadian green bonds are also more likely to be evaluated on their green impact than their global market peers.
Research limitations/implications
Limitations of this study include its focus on Canada, which may exclude or not apply to drivers and barriers in other green bond markets.
Practical implications
The paper helps create an accounting-based conceptual framework for key motivations and barriers that affect financial decision-making regarding green bonds.
Social implications
The authors identify economic and policy-related barriers and drivers for green bonds, addressing the financing gap for the LCR economy.
Originality/value
To the best of the authors’ knowledge, this study is the first to identify and compare Canadian green bond market drivers and barriers and to examine relevant stakeholder- and policy-related approaches that can be targeted to scale this market effectively.
Keywords
Acknowledgements
The authors would like to thank their interviewees for taking the time to participate in this research project. Authors would also like to acknowledge the financial support provided by the Smart Prosperity Institute’s Economics and Environmental Policy Research Network (EEPRN) for their academic research work on this market.
Funding: Funder 1: Social Sciences Humanities Research Council (SSHRC) – Award Number: 895-2017-1018 Funder 2: Environment and Climate Change Canada (ECCC) – Award Number: GCXE18P022.
Citation
Saravade, V. and Weber, O. (2024), "Catalyzing the growth of green bonds: a closer look at the drivers and barriers of the Canadian green bond market", Sustainability Accounting, Management and Policy Journal, Vol. 15 No. 3, pp. 605-627. https://doi.org/10.1108/SAMPJ-08-2023-0604
Publisher
:Emerald Publishing Limited
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