The Red Tape of Green Bonds Is Pushing Out Developing Countries

Sales of debt used to finance climate goals in emerging markets are plunging as the European Union cracks down on what it means to be a green bond.

Emerging-market borrowers have issued 23% fewer green bonds this year than during the same period of 2023, according to data compiled by Bloomberg on euro- and dollar-denominated international sales. The drop comes despite a boom in overall debt sales by developing nations.

The slowdown highlights a disconnect between emerging borrowers and the increasingly climate-focused EU. The bloc is tightening green bond standards following last year’s agreement on transparency and the use of ...