Title: Green bonds in the world-ecology: capital, nature and power in the financialized expansion of the forestry industry in Brazil
Authors: Miola Iagê , Junqueira Gabriela de Oliveira , Prol Flávio , Vecchione-Gonçalves Marcela , Ferrando Tomaso , Herrera Héctor 
Published: March 2021

The 2008 financial crisis opened the doors of green capitalism as a financially sound approach to saving the planet from the worst effects of the climate emergency. The emphasis on the role of finance in promoting “green growth” has permeated mainstream political, academic and business approaches to climate change adaptation and mitigation, assuming multiple forms - from the carbon markets of the Kyoto Protocol and the Paris Agreement, to the Environmental, Social and Governance taxonomy for “green” investments, to the proliferation of sustainable labels in several economic sectors. The present article offers a critical appraisal of one of the most prominent arguments that upholds the idea that it is possible and desirable to achieve sustainability and economic growth through finance: green bonds. Green bonds are debt instruments whose proceeds are earmarked to fund projects with supposedly environmental benefits. After some years in the background, they now occupy a central position in the green recovery narrative and political framework all over the world. Most of the academic literature tends to naturalize green bonds as an eminently technical solution to reconcile economic growth and environmental sustainability. Filling an epistemological gap, the present article leverages a world-ecology approach to embed the financial phenomenon of green bonds within the broader picture of the capitalist political economy and the expansion of its ecological frontier. In light of the ongoing experiences that the authors have been following in the Brazilian legal, financial and political context, the article unpacks and makes sense of green bonds as a tool in the hands of climate finance that reproduces global patterns of North-South uneven development and the shifting of ecological costs. To test the potential of the “interpretative framework” offered by a world-ecology approach, we mobilize it in the concrete case of green bonds issuances directed to fund the forestry sector in Brazil. Aware that the current phenomenon only represents a blip in comparison to the largeer temporal (the longue dureé) and spatial (the world system) scales usually deployed by world-ecology, we nonetheless discuss how the ideological, technical and power dynamics behind the issuance of green bonds unleash capital accumulation, produce a financialized and subordinated construction of nature, and entail an institutional arrangement. The article is organized around 3 main sections. After the introduction, section 1 describes green bonds as one of the most fashionable financial topics of the moment, and one that promotes a shift in discourses towards the need of actively building a “green economy”. Although from a legal standpoint green bonds embody no significant difference from regular bonds, our focus is to describe the promises around them, the current (private) governance structure, and the trends in the issuance of these debt instruments both in the Global North and South, with a specific focus on the case of Brazil. In section 2, we look at the operations of green bonds emissions on the ground, i.e. taking as an example the context of green debt underpinning the Brazilian forestry sector. The analysis reveals how the emissions, made predominantly by large multinational companies actively present on the global market, feed off great efforts deployed by both the public and the private sector in constructing an image of the sector as a key player in the emergent “bioeconomy” and in the strengthening of Brazil’s goals in the Paris Agreement. However, we describe how green bond revenues that are officially committed to the implementation of “sustainable management of forests” are associated with the expansion of the ecological frontier in the Brazilian territory, stretching the boundaries of the area dedicated to tree plantations and amplifying social and environmental tensions. The backstage of the emissions shows how capital accumulation through green bonds is associated with the co-production of nature for the purpose of accumulation, generating concerns that are often diluted or transformed into procedural requirements. Debt generated by the subscription of green bonds, we argue, is not only financial, but also social and ecological. In section 3, we put forward that for private accumulation to be successful, green bonds in the forestry sector demand an institutional arrangement that combines state support and private governance of debt in its financial, social and ecological dimensions. Rather than being the result of an idealized and spontaneous market, a set of institutional transformations have to be considered in order to comprehend the feasibility of green bonds in the Brazilian forestry sector. We thus describe the historic connection between forestry and the state, the endless public incentives to put nature to work, the functional adaptations of the Brazilian environmental legislation and the regulation concerning the demarcation, access and use of land. In this context, we argue that green bonds add yet a new institutional layer to the process of creating and validating specific forms of nature, through a governance structure that dilutes the tensions between the promise of environmental benefits and its concrete negative social and environmental impacts. We conclude the article by reassembling these findings as part of the capitalist world ecology “dialectical unity” of capital accumulation, co-production of nature and power. We suggest that the world-ecology approach allows us to grasp green bonds as a complex form that has so far been ignored in the relevant literature. As any other phenomenon of financialization, a green bond should not be understood in isolation from its material basis, since it is from that basis – and its social and environmental conditions and contradictions – that it appropriates value. As the example of the Brazilian forestry sector illuminates, the “greenness” of the financial debt inscribed in green bonds may come into existence at the expense of the social and environmental debt that underlie the forestry sector productive model. Hence, although the explicit inclusion of “environmental concerns” into financial considerations and project implementation has been praised as a step towards the recognition that finance has a material impact on the planet and that these externalities shall be accounted for, the article warns of the typical green arithmetic move put forward by green bonds. Green bonds inevitably co-produce nature and social relations, but in a very unequal way that emphasizes capital accumulation and that does not necessarily protect the environment (even when standards are introduced). Much to the contrary, green bonds may come into being at the expense of other ways of living ecologically, and by restoring injustices of the past and creating a regenerative future - in other words, by creating debt.