Structural and specific barriers to the development of a green bond market in Brazil

ABSTRACT

This paper investigates the factors that hinder the development of a green bond market in Brazil. Based on semi-structured interviews with representatives from the Brazilian capital markets, this study found that there are two sets of challenges. The first comprises structural barriers that curb the development of the local bond market and attraction of foreign investments, such as an unstable macroeconomic environment and inadequate legal protection for investors. The second comprises specific obstacles to the development of a green bond market, such as lower than expected risk-adjusted returns of low-carbon investments. We expect that the research findings will serve as a roadmap for policy-makers on which barriers must be tackled to develop a green bond market in Brazil, thus facilitating the transition to a low-carbon economy.

KEYWORDS:

• low-carbon
• capital markets
• institutional investors
• sustainable investment
• developing countries

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 On 13 August 2020, the authors held a workshop with a group of 15 stakeholders from the financial market in order to receive feedback about the results of this research. Although the workshop was not designed as part of a triangulation process, we considered it was an informal method to assess and validate our findings.

Additional information

Funding

This work was supported by Research England GCRF Funding.