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.