The Barriers of ”Greening” from the Perspective of Retail Investors – In the Shadows of Green Bonds

Abstract

Climate protection is becoming more and more vital. Everyone in our society is needed to fight against the global warming. The increasingly popular green bond can provide an excellent opportunity for this purpose. From the perspective of retail, non-professional investors, this article emphasizes the opportunities offered by the green bond market, highlights its shortcomings through primary and secondary data collection and finally makes a proposal to solve these problems. The paper introduces the green bond market, the different groups of the current buyers, and the various factors hindering market development, such as the lack of awareness, standards and definitions, uncertain yield rate, greenwashing, and limited transparency. During the focus group interview out of the 42 participants – divided into 6 groups –, only 5 had heard of the existence of the green security prior to the interview. Interviewees mentioned the fear of greenwashing, the lower yield offered by green bonds compared to the Hungarian MÁP+ securities and the lack of their savings as the biggest obstacle to invest in a green bond. In order for the green security to become popular among the retail, non-professional investors in the future, first it is necessary to promote its existence, positive environmental, economic and social long-term effects while raising awareness on climate change among inhabitants. On the other hand, offering a higher yield, and creating globally introduced laws and standards that can ensure adequate transparency are also needed.