Article drafted by Anna Chlampoutaki, Senior Associate and Mara Vasileiou, Associate for Lexology on December, 2025
Introduction
Climate change requires a transition to sustainable development models, with green financing playing a crucial role. Green bonds are a key tool for financing environmentally friendly projects, such as renewable energy, energy efficiency, and sustainable infrastructure. At European level, the sustainable development strategy is institutionally reinforced, with Regulation (EU) 2023/2631 establishing the European Green Bond standard (EuGB), ensuring transparency, credibility, and investment exclusively in sustainable activities. Greece is following the guidelines encompassed therein, with the integration of green bonds being a recent development.
Despite their benefits, their issuance comes with challenges, such as high costs, the need for transparency, high regulatory standards stemming from the harmonized legal framework thereof, and the risk of “greenwashing,” making an in-depth assessment of their role in the country’s sustainable development necessary.
Concept of Green Bonds
To understand green bonds, it is useful to briefly refer to conventional bond financing, in the first place. Bonds are a fundamental means of raising capital from the markets, through which a company or other issuer borrows from investors, committing to repay the capital at a predetermined time, along with an agreed-upon return. Legally and operationally, green bonds do not differ from conventional bonds in terms of structure or issuance process; they are subject to the same basic rules and create the same financial obligations for the issuer.
The essential difference lies in the use of the funds. While funds raised through the issuance of conventional bonds can be allocated for general business purposes, green bond proceeds are exclusively dedicated to financing projects with a clear environmental benefit, such as combating climate change, reducing greenhouse gas emissions, and promoting sustainable development. This commitment is not merely declarative; it is accompanied by monitoring and verification procedures to ensure that the funds are indeed used for the intended “green” purpose.
Green bonds therefore add an additional dimension to the investment: beyond financial returns, the investor contributes to measurable environmental outcomes. Various types of green bonds exist in the market, depending on the issuer. They can be issued by governments for large-scale environmental projects, by local authorities for sustainable infrastructure at local level, by international organizations for broader environmental initiatives, or by private companies to implement green investments. A common feature of all these bonds is that the funds are directed to specific environmentally targeted projects, offering investors a combination of financial return and environmental responsibility.
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