Regulatory standard

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Quality - regulation - noun.

A minimum mandatory level of quality and technical specification, embodied within a formal regulation, thereby increasing the standard's usefulness and reliability.

Green bonds need a regulatory standard - ECB
"Our findings show that, first, in the absence of regulatory standards, investors seek credibility of green bonds and issuers...
[We find a] need for a regulatory standard that will provide a clear definition of green bonds and requirements to assure that proceeds raised from the issuance of green bonds contribute to the transition.
Institutional investors may not have strong incentives to monitor the environmental performance of green bonds while retail investors may not have the capacity and knowledge to so.
Thus, a regulatory standard is key to channel investments into projects fostering the transition.
Furthermore, only a common standard can help avoid investors’ confusion, loss of confidence and potential runs even on the best green bond."
Pricing of green bonds: drivers and dynamics of the greenium - European Central Bank - Working Paper 2728 - September 2022.

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