As Southeast Asian countries accelerate their decarbonization efforts and investors demand more ESG products, the region’s green bond market is experiencing a significant surge, with issuance reaching $232 billion in the first four months of this year alone. Milbank LLP Corporate Finance and Securities partner Giles Kennedy, based in Singapore, comments on the topic in “Green Treasuries,” an article published by Asian Legal Business.
Green bonds, issued to finance environmental projects such as development of climate-friendly energy sources, are generally similar to traditional bond products in terms of legal structure, financial aspects and the issuers’ credit profile. “It is the commitment to ESG targets by the issuer that differentiates such bonds from traditional bonds,” Mr. Kennedy notes.
With sustainability-related obligations being the prominent feature of green debt, the article explains, the risk of “greenwashing” – misrepresenting the environmental credentials of a bond offering – has risen materially. This presents financial, reputational and litigious repercussions to the issuing companies. “Allegations of ‘greenwashing’ can occur when the stated use of proceeds of the bond is not fulfilled or is exaggerated in the offering process and disclosure,” says Mr. Kennedy.
The article underscores transparency as a crucial factor when issuers and underwriters are setting key performance indicators (KPIs). “It is recommended that issuers adopt qualitative performance indicators and, where feasible, quantitative performance measures and disclosures of the key underlying methodology and assumptions used in the quantitative determination,” Mr. Kennedy says, adding that increased transparency and investor demand for sustainable investment opportunities will drive continued growth in green bonds in Southeast Asia.
Mr. Kennedy focuses primarily on mergers and acquisitions, private equity, financings and cross-border securities offerings in the Asia-Pacific region across a range of industries. He is featured in the 2025 edition of The Best Lawyers in Singapore and recognized in the Chambers Asia-Pacific 2024 guide. Mr. Kennedy also is named among the world’s leading practitioners in Who's Who Legal: Southeast Asia 2024.
