Governing environmental commitments in energy sector green bonds: insights from China

Abstract This article examines the critical issue of green commitment deviation in the rapidly expanding green bond market, with particular focus on energy sector financing. While greenwashing has been well-studied, less attention has been paid to situations where issuers fall short of their stated environmental commitments despite efforts to some extent. The article argues that green commitment compliance warrants regulatory attention due to the governmental support, investor expectations, and corporate social responsibility requirements underpinning these instruments. Through analysis of China’s regulatory framework and market dynamics as a case, this research identifies key challenges in achieving green commitments, including the inherent disconnect between financial and environmental performance in green bonds and mismatch issues. It recommends quantitative thresholds for acceptable environmental performance deviation and enhanced governance mechanisms. The findings offer particularly valuable insights for emerging markets seeking to develop robust green finance frameworks that can effectively support their energy transition goals.