THE SOVEREIGN GREEN BONDS MARKET IN THE EUROPEAN UNION: ANALYSIS AND GOOD PRACTICES

In a world facing the growing problems of climate change and social differentiation, the so-called ―sustainable finance‖ increases its importance and popularity. The object of this field of study is the transfer of capital flows to projects with clearly defined environmental and social benefits. Key instruments are Green bonds, Social bonds and Sustainability bonds. The article is dedicated to green bonds, focusing on sovereign issues. It is widely known that the green bond market begins its development with the so-called ―supranational‖ issues – the bonds of the international financial institutions – the European Investment Bank in 2007 and the World Bank in 2008, for financing renewable energy projects. The real boom in the market starts in 2014 when new issues reach nearly $ 40 billion – four times more than in 2013. Exponential growth continues in the coming years, reaching $ 155 billion in 2017. Sovereign green bonds make a relatively late debut on the market – in the end of 2016, in a member state of the European Union – Poland. However, in 2018 government issues have already had a significant appearance on the market and are a strong signal of the state's commitment to environmental problems. The article analyzes the state of the European market in the context of the global market for sovereign green bonds. Review of international regulations and adopted standards, as well as of the legislative changes within the European Union related to sustainable financing, are made. The other focus is on the particularities in the methodology for issuing Climate Financial Instruments. The good practices for issuing sovereign green bonds in the European Union are also being considered and an attempt to outline the challenges to market development is made. The basis of the analysis is the sovereign bonds, issued from Poland, France, Belgium, Ireland and Lithuania.