Green bond market practices: exploring the moral ‘balance’ of environmental and financial values

ABSTRACT This paper explores why and how green bond investors apply environmental and financial morality. It analyses the coproduction of environmental and financial values in green bond markets using digital ethnography, industry literature and interviews with investors during 2019–2022. It analyses how green bond investors explain and narrate their diverse market practices in the balancing of financial and ethical returns, converging in an unstable space of mutual coproduction. The calculative practices and signalling of green virtue are performed in little machines of ethical inscription but are rarely either empirically validated or explicitly discussed. The green bond universe might appear stable, but its foundations are forged in long-standing intersectional assumptions, as it relies on, and reproduces, the historical structures of racial capitalism. The market practices described here are designed to help green bonds become a mainstream asset class. However, these are reproducing older discursive tropes and growth is elusive.


Introduction
There was a belief among participants in green markets during 2019-2022 that a huge revolutionary moment was upon us, that is 'here and now' and epoch defining.At the time of research for this article, sustainability linked bonds were valued at over US$3 trillion in the first quarter of 2022, only 15 years since the market started, with 2 trillion issued since the beginning of 2020 and 1 trillion in 2021 alone (Environmental Finance (EF) 2022).The EU had committed Eur240 billion to green bonds in its post-pandemic recovery package, proudly referred to by market commentators in a webinar in July 2021, as an example of a sovereign 'super charger' (EF 2021c, time tag [tt] 15.32).Fund and asset managers were announcing that a response to the unfolding climate catastrophe was within their grasp, born in a 'social shift across the world,' as people increasingly committed their money to sustainable investments (EF 2021c, tt 15.32).In fact, the only resistance to the speed of 'revolution' was seen as the market's ability to generate enough green assets for them all to invest in (ACRIS 2021, tt 14.52).This 'revolutionary moment' came with the emotive language of cape-wearing warrior heroes, all set to avert climate change catastrophe, save the biosphere from certain destruction, and ensure the survival of our children.Although by 2024, beliefs looked less certain and the expected exponential growth in green bonds did not materialisewith the USD1 trillion plateau reproducing in 2023sustainable finance remains significant overall, contributing 14.5% of total bond issuance in 2023 (EF 2024).
This article explores the green bond market practices of the 2019-2022 window, where this 'epoch making' projection of hope and opportunity was the key narrative device predicting growth in the segment.Green investing was a vibrant ethical landscape, responding to unfolding climate disaster and 'meeting the 1.5' [degrees of planetary warming] of the Paris Agreement.Alongside this hype, however, both buyside and sellside market participants were searching for practices to institutionally embed and guarantee greater size, scale, and diversity in the market: how were green bonds being expanded and how was this constrained by historical racial capitalism?This article concludes that despite the narratives, the market was unstable, with foundational weaknesses that, by 2024, remain durable.As de Goede noted, the role of historical legacy, as well as historical contingency, are regularly underestimated when 'Lady Credit'manifesting here in green bondsis being 'mastered ' (2005, 21-46).

Theoretical approach
The theoretical foundation of the research approach adopted here is heavily influenced by economic sociology, economic anthropology, cultural economy, and performative economics, wherein the economic and the cultural are widely seen as coproduced (MacKenzie 2009;reviews in Castree 2004;De Jong 2009;Cooper and McFall 2017;Bracking 2018), to explain how morality and ethics are 'materialised' (aka Butler 1993, 9).It is specifically informed further by Michel Callon, Fabian Muniesa, and Koray Çalışkan, and their legacy in science and technology studies, which gives the framework for studying market devices in green bond markets which condition the price, and other characteristics, of the product being bought or sold (Callon, Millo, and Muniesa 2007).
Issuers and buyers of green bonds claim to coproduce moral, environmental, and financial values in the production, circulation, and use of their products, in some weighted combination.Each aspect requires a different system of verification and validation, although these are sometimes combined.For financial value, investment decision-making is informed by modern portfolio theory, the vectors of risk and return, and tools such as the discounted cashflow (DCF) model (built on other assumptions such as growth of GDP, interest rates, and so forth), value-at-risk formula, and the financial return on investment (ROI).Traditionally, for professional investors, fiduciary duty is cited as the legal reason why financial returns are paramount (Friedman 1970): no matter what green or ethical claims are made about one's product or service, investors are 'maximising returns, pure and simple' (cited in Christophers 2019, 762), demonstrating a 'return maximisation imperative' (Christophers 2019, 763).Beyond the legal imperative, this pursuit of money is often also presented as an ethical activity in itself.For example, in Ho's ethnographic account of Wall Street, 'shareholder value' is an 'ethos' or 'cultural system' (2009,6) which is 'understood to be righteous' (Ho 2009, 5).
The movement to add other types of value and invest 'for good' across green bonds, climate bonds, and SLBs gathered pace in the 2008-2010 'post crisis ethical order' (Leins 2020a), where the finance sector faced a crisis of legitimacy and sustainable finance became part of a 'moral turn in finance' (Maso, Tripathy, and Brightman 2022), with an increase in the use of metrics (Clark and Dixon 2023).As Tripathy, Wood, and Ferry (2024) recently summarised, the responsible investment movement began with Economic, Social and Governance (ESG) as a consideration separate to, and in addition to financial value, and then moved to integrate ESG into financial reporting, using technologies such as quantification and metrics.In green investing, environmental value is also increasingly established in the 'little machine' technologies of taxonomies, standards, and climate risk disclosure frameworks.By 2022, and to date, the green investing sector was still struggling with the challenge of proving the 'double materiality' of environmental factors in investment decision making, where 'double materiality' refers to the effects of incoming types of risk, including climate change on the firm; as well as the effects of the firm's actions on its external environment.
Morality is now embedded in markets at three scales: (1) at a micro scale, formally inscribed and encoded in taxonomies, standards, disclosure and ESG systems, forming technologies of government (see Rose and Miller 1992;Latour 1987), inscriptive devices (see Mitchell 2005), or 'little machines' (Fourcade 2017;see Rose 1999, 37); (2) as morality captured and embedded in generic valuation systems, institutional or historical marketisation processes; and (3) through the narratives which inform the valuation and pricing process (Poovey 1998;Callon 2005;Miller 2002), and also the overall financial system, produced from interpretative and textual practices of accounting and writing (Poovey 1998, 56), materialised over time (Butler 1993) through discursive and interpretivist practices (De Goede 2005, 1-20).This article argues that historical structures of power have a greater influence at all three scales than is generally ascribed to them (see instead, De Goede 2003, 2005).

Little machines
Micro financial technologies, 'market devices' (Callon, Millo and Muniesa. 2007) or 'little machines' (Fourcade 2017;see Rose 1999: 37) are embedded in markets and create different types of value, including 'greenness' or green ethical worth (Berndt and Boeckler 2009;Braun 2016;Cox 2022).These calculative technologies are performative (Callon 2009), in that they change what they measure, reordering relationships between the objects, subjects and spaces they seek to merely measure and represent (Cox 2022, 298;citing Fourcade 2017).For example, Cox (2022) recently confirmed observable reactivity between what ratings agencies choose to observe and the pricing within climate insurance contracts.
This growth of plural machines of measurement has generated a vibrant debate in positivist work on how to balance economic and environmental imperatives (Reijonen and Tryggestad 2012;Bain, Ransom, and Higgins 2013;Finch, Geiger, and Harkness 2017;Perkins 2021), beginning from an epistemology which insists on seeing 'economic' and 'environment' as distinctly knowable, opposed, and separate domains.For example, Jones et al. (2020) argue that tensions and contradictions between financial and environmental value emerge in pricing decisions concerning interest rates.One position suggests a low interest rate to increase projects to be funded to allow more 'additionality' (extra decarbonisation impact over and above 'normal' investments) in financing new and innovative activities.But Jones et al. (2020) cite Shishlov et al. (2016) to the effect that lowering capital costs might misalign the interests of issuers and investors, as 'borrowers need investors to accept lower yields when doing so may not be compatible with their interests or fiduciary responsibility' (Jones et al. 2020, 53).A second advocates high interest rates and premiums to attract new investors, with rewards similar or enhanced relative to vanilla (normal) bonds of the same structure, but in which environmental impact could be less (Jones et al. 2020, 53).
Perkins argues that the conflict between financial and environmental returns is mediated by standards, which render 'environmental goods "sufficiently legitimate" while also addressing economic concerns by proving flexibility over the meaning of green' (Perkins 2021, 4).Those advocating more flexible [weaker] standards support their case by pointing to the [supposed] extra costs involved in verification, monitoring use-of-proceeds and post issuance reporting (see also Jones et al. 2020, 53;citing Banga 2019).These higher costs, when absorbed by the borrower, act as a penalty for issuing a green rather than vanilla bond such that 'the procedures for protecting product integrity can therefore increase the cost of capital when a decrease is needed to achieve additionality' (Jones et al. 2020 53).Investor demand, or willingness to accept lower yields for environmental benefit, can solve these contradictions somewhat, but leaves a difficult moral outcome that they are receiving lower premiums for 'doing good'.On the other hand, and counter-intuitively, the 'lenient zone of qualification' (Perkins 2021), where standards bring 'just about enough' assurance (Stephan 2012, 626) to make green bonds 'legitimately tradable' (Perkins 2021 2), could describe a place where lower standards, with lower verification costs, benefit and motivate the green investor with higher returns.But most industry debate reflects the frame of reference (see below) which expects a trade-off between environmental and financial value: it asks how much investors are prepared to forgo in dividends to pay for a shift to greater environmental concern.
A well-established minority position, which is followed here, is that since finance and economics are themselves culturally embedded and coproduced within society (see MacKenzie 2009;de Goede 2005;Butler 2010;Hall 2016;Cooper and McFall 2017), separate indicators of value cannot be seen as ontologically distinct but exist in a technopolitics of market construction (MacKenzie 2009).In other words, it would be sceptical, a priori, of the supposed 'extra costs' of increasing standards.

Market structures
Green finance has an additional objective beyond financial return: making the world a better place in respect of environmental sustainability and averting dangerous climate change.This can be viewed as a moral or ethical concern, and there is a long prior literature on what would make markets moral from Aristotle, Plato, Marx, Kropotkin, Gramsci, and Polanyi (reviewed in Paranque and Revelli 2019), 1 including on the importance of ethical values such as religious virtue (Weber 2014(Weber [1934]]), sincerity and authenticity (de Goede 2005;Adorno 2009;Keane 2002;Scheer 2021), trust (Muldrew 1998), and honour and integrity, found historically in the 'narrative of the gentleman' (Thrift 1994, 342).More specifically to the tradition of cultural economy, Marieke De Goede's work begins with a rejection of modern finance's 'appearance of scientific objectivity' and apparently 'undeniable economic realities' (de Goede 2005, 3, 5), committing instead to Foucault's task of genealogy: 'to struggle against the power of the "discourse that is considered to be scientific" (Foucault 1980, 84)' (de Goede 2005, 3).
In de Goede's genealogy of financial markets, she notes the invention of credit money, national debt, secondary markets in shares and the invention of insurance as constituting a Financial Revolution in Britain in the seventieth and eighteenth centuries, originally to manage the long-time horizons, unprecedented costs and uncertainties of slavery and colonial plunder.Even more than these inventions, 'the Financial Revolution must be thought of as the articulation of moral and political spaces in which these instruments became possible and condoned ' (de Goede 2005, 25).Historical struggle, political, and literary debatesthe 'Paper Wars' (Pockock 1975)were central to the development of credit and financial institutions, producing and managing new financial knowledge (2005,(25)(26), with Daniel Defoe in particular contributing to credit emerging as a respectful practice from earlier representations of its immorality (De Goede,(25)(26)(27)(28)(29)(30)(31)(32).'Lady Credit' was to be mastered by skilled, courageous and truthful men (sic), who eschewed her 'feminine irrationality', temptations and excesses using meticulous bookkeeping, and the new sciences of statistics and economics: a gendered and racialised, cultural representation which retains contemporary resonance (de Goede 2005, 25-42;90-98).
There is also an Othering in market-making, as ideas of the untrustworthy 'Other', of racial hierarchy and the 'risky frontier' have been embedded in calculations of risk historically, and used since to justify structures of transfer pricing and the extraction of rents from Africa since invasion by Europeans (Bracking 2009, 39-42).Mkandawire showed empirically that investment in Africa is systematically rated as riskier than is warranted by the underlying economic characteristics (2005,7; see also Bhinda et al. 1999).Similarly, Ferguson noted that the 'spectral category "Africa" looms large in these [investors'] perceptions, with powerful consequential results' (2006: 7) in low and expensive investment.More recently, Bear writes that green infrastructure bonds or net present value calculations used in metropolitical financial markets look purely economic if viewed only from within the moment of market exchange.But they contain within them long histories of colonial and post-colonial extraction.(Bear 2020, 9) Thus while widely seen as objective and mathematical, risk is used to differentiate the costs of borrowing, building in cultural repertoires of race, gender, coloniality, and class.

Story telling
De Goede cites Poovey's argument that early modern bookkeeping 'tended to create what it purported to describe' (1998, 56; emphasis in original), forming a precedent for modern accountancy, where 'systems of writing and numbering' assume economic categories exist, then effectively bring them into being through the reiteration of norms and citational practice, regulating economic agency and market credibility in the process (2005,(5)(6)(7).Thus finance is understood as 'a discursive domain made possible through performative practices … [such] that processes of knowledge and interpretation do not exist in addition to, or of secondary importance to, "real" material financial structures, but are precisely the way in which "finance" materialises' (2005,7).In short, 'the very material structures of the financial marketsincluding prices, costs, and capitalare discursively constituted and historically contingent' (de Goede 2005, 7), making finance 'a particularly interpretative and textual practice.Money, credit, and capital are, quite literally, systems of writing' (de Goede 2005, 5).
Writing, whether numbers, text, or more elaborate structured narratives, materialises financial norms, entraining 'expert knowledge' in investment decision-making, often generated from within epistemic cultures (Riles 2010;Zaloom 2006;Knorr Cetina 2007, 2011;Wansleben 2013;Leins 2020b).For example, Tsing argued that in 'speculative enterprises, profit must be imagined before it can be extracted; the possibility of economic performance must be conjured like a spirit to draw an audience of potential investors ' (2001, 159).Using the case study of Bre-X gold company, she argued that it 'was always a performance, a drama, a conjuring trick, an illusion, regardless of whether real gold or only dreams of gold ever existed at Busang' (Tsing 2001, 158).
Laura Bear (2015Bear ( , 2020) ) contributed detailed work on how interpretative practices, or 'technologies of imagination' (Bear 2020, 1) provide trajectories to an expected future, on which financial speculation and strategies of profit making can be built: brochures, branding, risk analyses, and so forth, are 'deployed to anticipate the future; to stimulate its emergence; and to control it' (Bear 2020, 8).For Bear, the 'economic' proceeds through 'calculations of risk based on the imagination of social differences' (Bear 2020, 2;citing Bear et al. 2015), with speculation involving the labour of conjuring social distinctions (2020: 9), meaning that green bonds are made using speculative labour, 'future-oriented affective, physical and intellectual labour that aims to accumulate capital for various ends' (Bear 2020, 1).In this, there are no 'externalities' because 'epistemes and tools contain ethical judgements on nations, communities and individuals' (Bear 2020, 8).Similarly, Leins summarised anthropological work which added 'affect and embodied experience ' (2020a, 73).For Leins, analysts construct narratives to 'sell' stories 'used to portray capitalist activities as meaningful and fully rational' (2020b, 4), in which language and ethics have a powerful role (Holmes 2009(Holmes , 2014;;Appadurai 2012;Leins 2020a).Moral interpretation even impacts the effects of the most advanced 'little machines.'For example, MacKenzie (2018) recently studied the morality of 'making' and 'taking' algorithms, both of which are needed to make trades, but to which the former is given a higher moral worth by traders because it 'makes' liquidity.Meanwhile, Christophers (2019) studied institutional investors in fossil fuel companies and showed that while algorithms and natural science are used to estimate carbon exposure, these are still incorporated using subjective judgement.
Money and finance are theatrical and emotional, inevitably involving storytelling, hope and promise (cf Tsing 1999 on Bre-X), and this has increasingly involved commentators technically outside markets as well as analysts within.Indeed, Clarke et al. (2004) described the relationship between the increasing production of market metrics and digital technologies and the growth of financial 'infotainment' from the 1990s.Clarke et al. argued that media techniques used to inject excitement and colour into financial markets also reactively changed the value of financial products as financial managers developed new forms of calculability to impact media representations and new audiences (2004,290).Media 'rules' which profoundly impacted financial practices included the rule of celebrity, where financial stories' are represented through 'personalities whose reputations are built around ex-cathedra homilies and opinions ' (2004, 293).Contemporary markets are replete with such personalities: one interviewee for this research jokingly noted a green finance mantra circulating in London in 2021 -'In Fink We Trust'referring to Larry Fink, CEO of BlackRock.In sum, as media and financial networks become ever closer, the 'construction of proof' (see MacKenzie 2001) has changed.

Green bonds and green bond markets
Green bonds are a generic class of themed, fixed income debt instrument, intended to finance activities, projects or processes that produce environmental benefit, defined in a 'use of proceeds' narrative, which informs investors of the borrowers' intentions in respect of the finance.The cost of green borrowing is generally the same as 'normal' or 'vanilla' borrowingit is based on the generic credit rating of the issuerwhile the green bond investor usually has recourse to the issuer's entire balance sheet, thus diluting their exposure beyond the specific project earmarked for the 'use of proceeds' (Maltais and Nykvist 2020, 1).The greenium or 'green premium' is defined as the reduction in cost a borrower can expect by issuing a green bond rather than an equivalent vanilla bond but is elusive to calculate (see Harrison et al 2020).
The green bond market was only initiated by the European Investment Bank (EIB) and World Bank in 2007 and 2008 respectively.This new fixed-income lending instrument was given a boost by the Paris Agreement in 2015, which not only mainstreamed the private sector within climate change governance more broadly (Thwaites et al. 2018), but also saw 27 global investors, managing $US 11.2 trillion, issue the Paris Green Bonds statement to build and support a global green bond market (Whiley 2015).The market grew rapidly with green stock exchanges, listings, indexes, products, and standards growing apace, and with demand generally outstripping supply (Jones et al. 2020, 52).There is not a legally established or universal definition of 'green,' which many see as problematic to the market's reputation (Shishlov et al. 2016;Berensmann et al. 2018;Talbot 2017;Wang 2018).It is a self-regulated market with accreditation and verification done by a mix of non-governmental verifiers of voluntary standards, credit-rating agencies, and external opinion providers.
Green bonds are joined by transition and sustainability bonds as environmentally-inflected fixed income products, and by sustainability-linked bonds (SLB) to make the green market segment.In fixed income products the issuer names the activity that the finance will be used for on a 'use of proceeds' basis, whereas in the SLB the environmental benefit is captured in key performance indicators (KPIs).Typically, if these are met, or not met, generates a step down, or up respectively, in the premium paid (ironically perhaps risking the creation of a perverse incentive for the investors to not want the KPIs to succeed) (see Tripathy 2017).Because these KPIs can be much broader, and entirely process based (for example, meeting one's own management plan), rather than pegged to actual biophysical impact, this is widely seen as a looser form of green qualification.However, it is one which has brought sizable issues, prompting speculation as to whether the SLB will eventually 'cannibalise' the more stringent and costly (in transaction, verification and reporting) green bond 'sibling' (EF, 2021b).On the other hand, the SLB carries risks of dilution and reputational risk to the whole sustainability-linked finance sector.At the time of writing this paper, the process of 'pacifying' the green bond commodity (see Çalışkan and Callon 2010), and the contest over which iteration of green finance debt product will become the 'dominant category' (Suarez, Grodal, and Gotsopoulos 2015), is still in process.

Methodology
This article explores the universe of green bond financing, with particular attention to London and Johannesburg, the former as a leading issuer by volume, and the latter as a leading emerging market issuer in Africa.It studies traders, investors, issuers, bankers, policy makers, and 'market-making' NGOs such as Climate Bonds Initiative and Environmental Finance.It uses source and methods triangulation to trace the imaginaries, narratives, and future-framing beliefs which give meaning to ethical green investing.
First, I used digital ethnography of online conferences and webinars, where I made notes and observations and monitored the audience questions.These were recorded, and these used to generate transcripts which were subsequently deconstructed and thematically coded.I attended 16 webinars, roundtables and online conferences halls in total over the period 2018-2022, taking advantage of an atypical moment of openness in the environmental finance community, prompted by covid-related lockdowns, where meetings were moved online, normal exclusion rules relaxed, and entry fees dropped.The webinars and conferences add to over 40 h of transcribed debate in total.Obviously, I could not ask exact questions related to the research, but the webinars were all on related themes, impact investing, ESG impacts, green bond markets, ethical investing or environmentally themed investing.I have reproduced speech from these using generic titles for speakers: while the participants are known, they have not given direct consent to be quoted elsewhere, despite appearing in recorded semi-public fora.
The quotes used below were chosen as typical of flows of argument in the webinars.However, much of the webinar content was also very technical, formulaic and abstract, with few identifiers or detail of actual trades or customers, and with ethical concerns either absent or buried deep in inferences and signifiers.After coding, I have thus included examples which are the closest to the 'surfacing' of morality, or ethics, this latter understood as a 'coordination of action in relation to a deeply held commitment' (Mellor and Shilling 2017:31).
Second, I used content analysis of a dataset of industry grey literatures, particularly from online magazines and news platforms such as Bloomberg and Environmental Finance, The Financial Times, corporate and bank websites, technical and regulatory reports including from market verifiers and regulators, such as the Climate Bonds Initiative and the European Platform on Sustainable Finance.Third, I used expert elicitation using semi structured interviews, to inductively verify and validate results, and to pose a set of direct questions about the motivation for green labelling and investing.These expert interviews, lasted 90 min each, to elicit expert validation of the initial results from the digital ethnography, followed by 2 more engagements in 2022 with fund managers, again to verify results.My three interviewees were a green investor and equity holder of a USD70 million fund; a senior policy advisor from the Climate Bonds Initiative; and a member of the Board of the Johannesburg Stock Exchange (JSE).The quotes reproduced from the interviews (below) were chosen to illustrate contradictions in the way green is produced, as well as consensus understandings.While further interviews would have added to the research, saturation was achieved with the combination of interviews, grey literature and webinars, and this combined data set generated the interpretation here.
A limitation of this method is that it is not participant observation of actual deal making, although this is, in any case, largely impossible because of commercial confidentiality.Observation here is limited to observing investors talking about their decision-making, which leaves room for respondent bias.However, there is also a conundrum that the point of decision-making may not, in any case, be the best vantage point to study ethics, as by that point, many beliefs and deeply held commitments have already been 'baked in' to the encounter, including beliefs around race, gender and spatial post-coloniality which affect price (see Wong 2017;Ponder 2021).The ordering of the importance of different criteria, such as fiduciary duty and environmental impact in decisionmaking, may not therefore be a conscious decision: some part of that ordering is structural and beyond individual choice at the point of exchange.

Findings
From the webinar transcripts the themes of sincerity, authenticity, trust, probity, integrity, honesty, prior performance, historical connection, and track record emerged as central themes in why particular business relationships, investments, and trades were successful.That these themes were dominant resonates with long-standing work on morality in markets (see above), not as ephemeral qualities, but recognised through interaction and references to 'knowing' a business partner, often for a long time, where 'hard work', perseverance and dedication were said to deliver success, even against overwhelming odds.In fact, sincerity and authenticity were salient in traders avowed interpretations of success, even when profit could be the first explanation for an investment decision.For example, during 2019-2022 green bond investors generally enjoyed higher returns relative to other types of bonds, but a market commentator reminds the audience that 'no-one should be investing in a sustainability bond just for the pricing perk.It is a higher quality credit.An investor has to be sincere and the market is getting good at spotting insincerity' (EF, commentator, 2021c tt 15.40).
From the transcripts, morality can be identified as embedded in varying gradations, and at various scales, to create green signification, starting with the individual investor, market commentator or issuer, who has a personal 'journey' into the 'green space', with anecdotes to demonstrate integrity, often involving personal risk 'of losing everything' to show the heroism needed to be at the forefront of change.Then morality is embedded within the financial products themselves, in the individual calculative technologies which act to generate moral affect (see above) -ESG scores, green taxonomy classification, carbon disclosure scorewhich are all punctuation points in the narrative story of the 'use of proceeds.'The firm is also a site of ethical demonstration, where worth is indicated by marketing, language, colour use (green), imagery (long rows of solar panels, wind farms, etc.) and narratives of 'our mission.'Then at ever graduating scale, we arrive at stock exchange segments, green banking networks, and communities of firms in sectors with more formal ethical investor mandates.These might include the Natural Capital Investment Alliance, the Net Zero Coalition, or The Network to Green the Financial System, where expected behaviour is being written, or codified within the group.And then at a transnational policy scale, we have total system signally of the Green New Deal in the USA or European Green Deal in Europe.

Narratives and sustainability 'journeys'
There are many references to the epoch-making moral journeys that investors and issuers share, in which investors and issuers of green bonds represent themselves both absolutely and comparatively as occupying a morally superior position among investors.These journeys are unique but are shared in the sense that they have repeated and common tropes of epiphany, heroism and a 'gogetting' entrepreneurship.For example, a speaker at a virtual conference on Blue Carbon proclaimed: 'It's simple, the atmosphere needs decarbonising, the biosphere needs re-carbonising.Let's get on with it!' (Blue Marine Foundation 2021, tt 15.44).In a July 2021 webinar on labelling, disclosure and taxonomies in environmental markets, hosted by Environmental Finance (EF), a moderator asked: 'Will just labelling stuff be enough to help the capital move to where it needs to go?' The answer from a prominent member of the European Platform for Sustainable Finance was victorious and resolute: 'I think we can do it with disclosure and targets!We can get quite close ' (2021b, tt 17.31−17.33).
Professed morality is sometimes located in their choice to work in green markets, a priori of any particular investment decision.This theme recurs often in the self-narrated journeys of investors and issuers, where individuals have left fossil fuels to pursue different careers in renewables after a personal epiphany around the existential threat posed by climate change.Others retain investments in 'brown' industries but distinguish their virtue by 'ratcheting up' incremental commitments to 'be better'.'Brown' refers to carbon intensive industries, with transition bonds used to move, or 'transition,' these to less carbon intensive assets, such as lending for 'clean coal.' Investors here often claim that incremental changes will aggregate to more impact at scale than contributed by their more purist 'green' counterparts.For example, I asked our JSE Board member whether transition bonds issued by high-emitting industries, such as the South African parastatal power utility Eskom, risked reputational damage to the green market.She replied that while 'green washing' was a concern, and investors want to know that their green bonds are pure and clean.But actually, the pure and green, clean, green bonds are not the stuff that really matters.What matters is getting the dirty stuff clean right?So we need to transition all this stuff'.(Interview, 10th June, 2021, tt 40.42)Thus moving and changing things can have moral weight, as well as establishing new infrastructures.In fact, green bonds have a great diversity of uses, and the means of signalling ethical virtue is fluid and complex: material carbon emissions avoidance in a 'brown to green' 'climate journey' may not be as important to investors as their clients' 'investor mandate' to buy something 'pure play green' such as a wind farm.In 'pure play,' green might be further shaded metaphorically, with virtue increasing from 'light green' to 'dark green.'However, while many investors profess a commitment to averting climate change catastrophe, they are generally also persons who believe that fiduciary responsibility is sacrosanct, a moral code, where to conduct business is to be 'fiscally prudentnothing more or nothing less' (Interview, 6th July, 2021, tt3.30).Ironically, and to illustrate the complexity here, this view was articulated by our green fund manager, whose 'pure play' firm builds renewable energy infrastructure.For him, renewables are part of the transition because they are competitive, and he is annoyed by fossil fuel subsidies which he wants 'ramped out [stopped] in 365 days, 720 max' so his comparative advantage would be made visible.But individually, he is working in that sector, rather than any other, to show his moral commitment to the future: 'we are not messing around: this is a climate emergency.'From this position of ardent environmental commitment, including to fiduciary duty, he is highly critical of the green labelling 'nonsense,' 'fooling around,' arguing that those in the 'green bond' space are 'not doing real business,' just hiding their delay to take climate seriously (Interview, 6th July, tt 3.50).For him, the green bond universe is full of misleading bandwagon appeals from baseless claims.You know most of this green label [profanity] … .has nothing to do with any kind of empirical reality … nobody serious is thinking about green labels.Nonsense garbage.(Interview,6th July,tt 1.40)So perhaps counter-intuitively, some 'deep green' investors eschew the green label: their meaningful future is articulated by their (highly competitive, non-fossil fuel) personal and company profile having already been established.

'Balancing' financial and environmental worth: standards and little machines
We noted above how positivists have framed the debate on green bonds as a balance between essentially contradictory financial versus environmental objectives.This framing is also the dominant one among market participantswith notable exceptions like the pure play investor aboveand generates a debate on standards which is similarly organised around a trade-off between green and financial value.Generally, those stressing a 'greener' dominance seek harmonisation, standardisation and stricter quality control measures; while those stressing fiduciary returns seek diversity, liquidity, flexibility and an 'all comers low bar' for issuers and investors.The first worries about the dilution of principle produced by the second, while the second worries about the limiting, constricting and 'crimping' potentially produced by the first (EF, 2021b).However, perhaps standards here are doing too much analytical work, as the participants of webinars also stress disclosure, taxonomies and wider market knowledges, and reputation as affecting their decision-making.
For context, many of those observed here had been active in the debate concerned the Green Bond Principals and the Climate Bond Standards from 2010 to 2019, which was referenced quite regularly, with the former seen as more lenient and flexible, and the latter more stringent but restrictive.The former was drafted and promoted by European and US underwriting banks and the International Capital Markets Association (ICMA), while the latter were produced by the Climate Bonds Initiative, a London-based NGO which hoped its framework would encourage a market in climate bonds.The Green Bond Principles require [only] procedural requirements for issuers to report on use of proceeds, rather than any necessary reference to the science of carbon, so are seen as more practical and by 2019, had become the normalised verification device.In contrast, climate bonds failed to grow, although the CBI remains important as a market certifier.
The arrival of the new EU Sustainable Finance Taxonomy during the research period in July 2021, for which the CBI provided advice, reopened the standards debate somewhat, as banking underwriters bemoaned the greater paperwork involved and the potential for greater scrutiny drawing down on issuance (EF, 2021b).But on the side of tighter standards was one commentator from Environmental Finance, who spoke of the 'experimentation rife' in SLBs, asking 'just how material' they really were, speaking to the 'legitimate criticisms' that 'ambition has to be ratcheted up' (EF, 2021c).This commentator believed that greater issuance would generate more market data to 'hammer the market into shape': that while greenwashing is a perennial risk in green markets, self-regulation is catalysed by data, as choice and scrutiny grow, generating 'lots of scope for market-driven changes to improve standards and sustainability impact' (EF, 2021c, tt 15.35).However, by 2022, the impact 'evidence gap' of green investing was still regularly debated.As one EF webinar presenter concluded: sometimes it is hard to see the materiality [of impact] Some issuers are doing it really well with rigour, others it's an absolute GHG [greenhouse gas emissions] number and it goes from a high to low number year on year and it's hard to see the workings behind it.[EF, webinar, 2022 tt.35.35]Despite this anxiety over measurement though, mostly the ethical worth of green investing is simply taken for granted: if it is called green it must be good.
However, to assume that all market participants work in this frame of reference, of distinct, predetermined categories of undeniable 'economy' and 'environment' that require balancing, would be erroneous.For example, our expert from the JSE also points to the coproduction of economic and ethical value: doing your valuations, I think the DCF or quantitative model [is central] … .butwe need to acknowledge company valuations are a function of the qualitative stuff and they always have been.
She argues that even while ESG is 'kind of new' and 'non-financial,' even financial calculations are subjective because while the hard numbers are always backward looking … the forward looking stuff is what the company says its going to do.Forward projections about what likely revenue is going to be from those things, so estimations of management quality and the likelihood that they'll be able to deliver on those … .arequalitative subjective judgements in any event … .There is a DCF component to it, but valuations factor in all kinds of subjective elements.(Interview, 10th June 2021, tt18.34)She then continues the theme of the complexity of calculation, arguing that biodiversity loss is even more complex than climate change, and that in the investment space the skills to do effective analysis of that kind of stuff just aren't there … .they're limited within the scientific space, let along the banking space … so people tend to make … quite rough sort of decisions on divestment, [around whole] asset classes … because we can't make nuanced distinctions.(Interview,10th June,tt28.16)She is thus much closer to the epistemology of de Goede (2005), that finance is being written through calculations heavy with a host of diverse assumptions and tropes.
For example, in an insightful comment, which in itself confirms the veracity of a performative, cultural economy approach, our JSE Board member noted that 'measurement problems' [of financial or environmental impact] also arise as time horizons lengthen, with financial return projections challenged as you have to start to incorporate all kinds of environmental and social issues … .embedded in the finances … … in the language of finance, the kind of materiality lens.(tt10.25)She cites the IFRS and Sustainability Standards Board as being concerned with this, so 'if you look at a long enough time horizon everything becomes financially material, arguably, at some point in time' (tt10.43).If green investing has fallen short thus far, it is 'not that we aren't good people.The problem is that time horizons are too narrow' (tt9.49).Meanwhile, she mentions that scale also matters: BlackRock for example, as a universal investor, are simply too large to avoid climate risk by disinvestment, making the financial and environmental realms inseparable in their investment practice (confirmed by a BlackRock executive, webinar May 2021).
Despite these insights, subjectivity (and value co-production) is normally disavowed by investors.As our JSE expert confirms: institutional investors in banks still think that it's their fiduciary duty to get the best return, and that's their morality … to make as much money as possible.(Interview, 10th June, tt 7.25) After all, 'the purpose of the banker is to generate financial returns, right?' and 'personally I think you start to stray into fairly problematic territory anyway when you start to say … your purpose must be all sorts of other things as well' (Interview, tt8.40).So, for this interviewee, subjectivity is accepted, but nevertheless, explicitly tipping that in favour of the environmental good would be morally unacceptable.

Market expansion, power, and authority
This use of standards, regardless of evidence, makes market expansion possible if enough people accept the worth of harmonisation.It also makes markets in a particular spatial and governance structure.For example, a senior European Platform on Sustainable Finance representative argued that standard setting requires scale and harmonisation, and is inevitably an 'international question': To what extent are our IFRS IOSCO [International Financial Reporting Standards (IFRS) Foundation & International Organization of Securities Commissions] standards going to align with the US approach, or is a TCFD [Task Force on Climate-related Financial Disclosures] approach going to be the linking instrument across the US, IFRS IOSCO, and as a baseline in Europe?..that's ultimately the end we're all trying to work towards, to try and maintain some global harmonisation there, but done in such a way that the additional disclosure expectations in Europe can easily connect to that international framework.[EF, 2021b, 14.55-15.32]For this market maker, alignment with US and international accounting and reporting standards is 'the key issue', requiring a standardisation of taxonomies to reduce transaction costs in the market.In July 2021, 'that piece hasn't played out yet', but he hoped that a further 'common ground taxonomy' by the International Platform on Sustainable Finance due later in 2021 would further the opportunities arising from convergence.
However, in an early call on more traditional sovereign authoritywhich has become more common sincehe wanted the investment community to put their efforts into pushing governments to 'get the real economy piece moving in addition to these investors who are really taking the load of regulatory reform', because: it's time for government to deliver on the real economy side and the hope of course is that all of this can avoid a situation where governments start intervening directly in financial markets; where they are starting to direct capital and direct the closure of assets in very directive ways that don't allow markets to make choices.That's the risk of all of this that we move too slowly to come out with sensible transitions in terms of the, say environmental boundaries.And then you are back in the world of popular politics, reactive governments, non-market interventions and that's the kind of scenario that we in markets want to avoid.Its why these market friendly disclosure and transparency regimes have such an important role, for now.[19.07]Moderator: 'So we have a window where markets can sort the problem out, otherwise it will be sorted out on their behalf?Basically Senior EPSF: Absolutely [EF, 2021b, tt 18.02−19.07]Markets in this view have a greater morality in managing change than governments, even though the latter have a role in the 'real economy.'Overall, standards here are a market building device whose worth is found in harmonisation rather than in stricter environmental referents, and this market-making is also reproducing structures of racial hierarchy (see above) in its insistence that the 'international' begins in the USA and Western Europe.
Indeed, the framing of 'global standards' emanating from Europe is a common trope in the webinars led by representatives of European and North American banks, where 'global' refers to the outward projection and colonisation of wider geographies by their products.For example, in a webinar in April 2021 on Investing without Borders, hosted by Environmental Finance and supported by the IFC Green Bond Technical Assistance Programme, attendees are first assured that the emerging market (EM) green bond outperforms its vanilla counterpart; is 'on its way to becoming a mainstream asset class' and is not far from having its own benchmark or index.Later, panellists are asked what barriers or misconceptions are potentially slowing the EM green bond market and a senior manager from a leading global bank answers: perhaps the perception is that there is a different set of categories or approaches in the emerging market side, we work on the origination side, from our perspective, we are trying to deliver a product to investors that is consistent with First World, you know, OECD standards.… I focus on Latin America, we are really trying to meet the same standards.So if there is a perception that there are higher risks in EM, or that investors are being asked to take a greater leap of faith, I would say that is not the case … that's not the market that we are trying to build.(EF, 2021a, tt23.29)Similarly, another panellist, a senior manager of credit research in a large global investment management fund assures the audience that one of the biggest potential misconceptions from investors is that an emerging market green bond, or ESG bond has less impact.The way I would disagree with that is if you've got a very developed market company with very advanced ESG … the actual impact is going to be relatively small, however if you have an emerging markets company that's at the beginning of their sustainability journey … well that has quite a sizable impact on climate and carbon and that can also have a very positive social impact, much more so than some of the seasoned bond issuers that you see in developed markets.(EF, 2021a, tt24.39)In this discussion, the EM market can perform better in impact terms, but only because it is further 'behind' to start with.It bears no extra risk, because global banks insist on standards, and any local bricolage in these is always kept 'within limits.'Thus a third investment manager reassures the audience that underwriting standards, use of proceeds reporting and due diligence are met 'the same for all transactions,' so investors do not have to fear a lower standard (EF, 2021a, tt 31.20) after all, 'we' all know 'at the end of the day, money is fungible.'Thus the association of distrust, corruption, and fraud that is foundational to the risk ascribed to the 'Other' is conjured, only to be expelled by the investment bankers in an expression of control and reassurance (and of course, a fee).
A hierarchy of nations within the world view of European and US financial managers works to organise zones of risk and morality.As another investment banker notes: Sometimes it happens that there is an expectation from a debit issuer from an emerging market to be at exactly the same speed as a Swedish company that's been issuing green bonds for a long time, you have to be pragmatic about it, you have to recognise its an ask for the issuer to take on this additional responsibility.[EF 2021a, tt30.21]Thus the harmonisation and standardisation of ethics in market-based governance are not understood to create a uniform or truly integrated techno zone because it occurs in the context of this socially differentiated hierarchy, which explains the need for domestic interpretation, hybridisation and strategic incorporation.Bricolage is encouraged, in the context of investors believing they can still differentiate between companies that are 'truly ambitious,' 'beyond business as usual' from those others who are just 'riding the train' (EF, 2021a, tt 59.10).

Historical racial capitalism
The webinars involving DFIs often invoked the categorical sink of 'Africa' whose 'problems' are ubiquitously 'exacerbated by climate change': 'Africa is risky'we are told.For example, a senior export credit manager from the British government, argued that the problem is not the availability of funds (cites a 'large' UK government commitment of 'a further £2 billion in export finance to accelerate green growth'), but on the 'other side', where African governments need to get the 'enabling environment right' and 'articulate how they are managing fiscal responsibility' while making sure 'standards are there' (ACRIS 2021, tt14.57).A senior European Investment Bank (EIB) representative agreed, listing a number of deficiencies and 'lacks' that are inhibiting green and climate finance: in bankable projects, awareness, data, technical capacity, knowledge of risk, capacity to implement on the technical side, or an enabling framework (ACRIS 2021).Similarly, An African Development Bank (ADB) senior official notes briefly (!) the high returns available in Africa, but then largely concurs with the framing of deficiency, and argues that more adaptation funding will be generated if a business case, rather than a public good case, can be made for green finance (ACRIS 2021, tt15.07).In short, the developmental litany of capacity building, innovation, de-risking, institutional readiness, better leadership, and strategic multistakeholder partnerships are required for market expansion.
This bifurcated language of deficit and benevolence has framed international development since at least the 1970s, with each perceived deficiency matched by a future-oriented 'need' to change, which adds to the cost of borrowing, and transcripts from this research illustrate its reproduction in green finance.The result, according to a Senior Banker, is that Africa endures a premium on the cost of green finance, paying 5 times more for bond financing than the countries in the OECD (ACRIS 2021, tt. 15.23).Volumes also follow perception closely, with only 6.5% of global green issuance going to Africa and Asia (excluding China) between 2007 and 2016 (Banga 2019).Meanwhile some African markets are excluded altogether.Our green bond investor illustrated this in an exasperated anecdote of the inability of development finance institutions (DFIs) to involve black investors in Zimbabwe, despite this being their job.Apparently successive meetings at DFI country offices in Harare and Johannesburg, to discuss his companies' investments in solar power in Zimbabwe, were met only with the persistent questions of 'Why would you go to Zimbabwe?' and 'Are you sure you want to do work here?' (Interview, 6th July tt.10.59).Our investor refers to DFI personnel as 'stumbling through space and time' (Interview 6th July, tt.10.30).
In sum, while Africa might be risky, and emerging markets might be 'behind,' Europeans are generally sure that they are 'in front.'In a typical example, the European Union launched its Strategy for Financing the Transition to a Sustainable Economy in July 2021, including guidance on its European Green Bond Standard (EUGBS), with a Press Release noting 'the EU's global leadership in setting international standards for sustainable finance' (European Commission, 2021b).Similarly, a leader of a standard NGO summarises that European policy makers 'want to lead the world in rule-making' because 'we are advanced ' [EF, 2021b tt 15.10, 16.08].European DFIs assume this role of stewardship in leading globally, with the sine qua non of the moral case that without the catalysing efforts of DFIs, many private investments would simply not exist.The ideas of market and frontier making, augmenting and catalysing others and providing demonstration effects are concepts with long etymologies in development finance; a vocabulary which carries authority and power (Bracking 2009).

Making a difference
Many investors in this research framed their work as 'making a difference,' fulfilling a moral mission in providing capital to those without.Since capital is generally scarce and given that most investors in fixed income bonds have a choice of products to choose from, the choosing of a green optionall other things being equalfulfils the qualification of the investor as a good person, similarly irrespective of measurable ESG impact.The DFI representatives (not our respondents) went further to frame green bonds in the vocabulary of a developmental gift: the gift of the critical capacity of finance to 'do things.'This act of choice also contributes to the performativity of the act of investment (see Appadurai 2016), in generating a greener market trajectory: as one firm receives money, another is left illiquid and may close.In this way, the agency investors execute as 'active decision-makers' (aka Leins 2020b) is helping to build the greener future we/they want while producing an egoistic reward for the money-holder, just like the gift rewards the giver with a sense of worth and perhaps the bonus of gratitude.In this effort, however, prior historical structures of race, gender and class are reproduced.

Conclusion
But, the main finding of this research, despite the personal 'sustainability journeys' is that explicit ethical consideration and debate does not regularly occur in discussions of green bond investing and is not essential for successful marketisation processes, beyond that standards are used as a means of market control and discipline (aka Foucault).An expedient 'black box' of assumed ethical credential (of issuers and investors) is generally sufficient to motivate and enable successful 'green' trades.In other words, ethics is encoded into green investing by inscriptions of morality found in the little machine technologies of 'proof', and by relationships marked by trust or Othering, enabled by a flexible, categorical plasticity in relation to impact.The price of green bonds is thus derived from historical market structures and their embedded incorporations of race, gender, class, and postcolonial power, whose repertoires of worth and deficiency are mobilised to explain variable interest rates, often despite evidence of returns.Economic, financial, and environmental categories are certainly not distinct.
So, was this a 'revolutionary moment'?Green bond investors and issuers clearly believed they were part of a 'civilising' marketisation experiment (Callon 2009) with the potential to 'green' contemporary capitalism.The green bond segment is where investors, issuers, and underwriters can express their environmental values, commitments, and virtue by investing (Paterson and Stripple 2012;Barman 2015).There is, in green bond markets, a moral responsibility to invest (cf Ortiz 2014: 39) and invest as much as possible, to 'make a difference,' conjuring financial and environmental returns into balance in the service of moral imperative.
But our experts also demonstrate the fragility of this civilising construct.For our investor in renewables, green labelling is 'garbage,' 'nonsense,' insufficient, too late, and a distraction from responding to climate change (Interview, 6th June 2021, tt3.30).Meanwhile, our JSE expert, when asked why issuers generate green bonds, replies 'Can I be honest?… It's a marketing positioning exercise that allows them to … signal.This is the kind of company we are' (Interview, 10th June, 2021, tt 1.22).This signalling of virtue will produce reputational returns to the issuer, even if the underlying project fails to make a profit or have any environmental effect.In this way, a green bond builds legitimacy for the issuer or even the economic system in general.In short, the green bond may be the metaphorical healthy side dish to the gluttonous main course of self-destructive fossil-fuelled capitalism, signalling, as Hildyard noted in his book Licensed Larceny, a simultaneous act of virtue performing an act of theft: He goes on Sunday to the Church to hear the Parson shout He puts a penny in the plate and takes a pound note out And drops a conscience-stricken tear in case he is found out.