The European Union’s inaugural green bond sale wowed investors this week with its record size and massive order book. But it also raised some awkward questions about how the money will be used.
The EU’s green bond program isn’t yet covered by its own rule book for such debt. Instead, the bloc is applying a framework that governs a separate facility dedicated to Europe’s recovery from the pandemic. While that program also screens for environmental criteria, it’s not as strict as the EU’s green taxonomy, according to Sebastian Mack, a policy fellow at the Jacques Delors Centre, a Berlin-based think tank.