On the validity of corporate green bonds’ environmental claims: is the environmental reporting of corporate green bonds reliable?

Abstract Green bonds are debt instruments aimed at raising funds for sustainable investments. While issuers must provide post-issuance impact reports to inform investors about the allocation of proceeds, these reports lack standardization and often contain unverifiable claims, limiting independent assessment. We examined a dataset of 1600 corporate green bonds (CGBs) and found that only a small fraction provided project-level data. For these 32 bonds and their 192 projects, representing issuers with the highest level of disclosure, we applied a LCA-based methodology to verify the reliability of the environmental impact claims of the issuers. In about 73% of cases, reported avoided climate change (CC) impacts exceed LCA-based estimates, highlighting the lack of methodological consistency in post-issuance reporting. Applying a cost-effectiveness perspective, we estimate that one million euro invested in a CGB from our sample can avoid the annual CC impact of 44–48 European citizens, but effectiveness varies significantly across projects. Expanding the analysis beyond CC to other environmental impact categories reveals significant uncertainties and potential violations of the do no significant harm (DNSH) principle of the EU Taxonomy. This study demonstrates how LCA can enhance transparency by benchmarking green bond impact claims, comparing climate cost-effectiveness across investments, and ensuring compliance with DNSH through standardized metrics. However, the lack of mandatory project-level data disclosure, which is not requested by the existing green bond standards significantly limits the potential of such analyses. Strengthening project-level reporting, integrating LCA methodologies, and enforcing third-party verification would improve transparency, comparability, and credibility in CGB markets.