Sustainable debt markets: the European perspective

Serena Fatica

Chapter 16 in Handbook of Climate Change and Financial Markets, 2026, pp 328-344 from Edward Elgar Publishing

Abstract: Debt capital markets play an increasingly important role in financing the response to climate change. This chapter discusses and reviews evidence on opportunities and risks arising from sustainable debt instruments for borrowers and investors. It focuses on the European experience, in an effort to put market developments in the context of the rapidly evolving EU regulatory landscape on sustainable finance. By critically reviewing the literature, the chapter delves into the economics of use-of-proceeds securities, such as green bonds; highlights similarities and differences with respect to sustainability-linked debt, and its role in transition finance; and discusses incentives and challenges for their use, emphasizing the importance of transparency and credibility for the development of sustainable capital markets. It concludes with some reflections on the financing of climate adaptation and resilience.

Keywords: Climate finance; Capital markets; Green bonds; Sustainability-linked bonds (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035340415
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