Bond issuers appear to be rethinking the merits of issuing ESG paper.

Behind this is the concern that the lower financing costs made possible by the label might not outweigh the risk of being exposed to accusations of greenwashing.

"There are a number of issuers who are reassessing value for money," Jason Taylor, managing director of sustainability advisory and finance at the National Bank of Canada, told Bloomberg.

"When defining a successful sustainable finance transaction, there are many dimensions to analyze it by," he said.

“One of them is the cost savings from the Greenium.

But when this is coupled with a high level of post-transaction critical scrutiny, it may cause some people to question whether

So far, regulatory action against greenwashing has focused primarily on asset managers.

But the financial industry itself has repeatedly raised concerns about the risks lurking in some corners of the green, social and governance bond market.

NN Investment Partners, part of Goldman Sachs Group, is among the wealth managers that are becoming increasingly picky and increasingly rejecting ESG bonds, they said last month.

Isobel Edwards, green bond analyst at NN Investment Partners, said she and her team are often skeptical when they see some of the claims made by issuers.

"We tend to call it a greenwash when it comes out and everything is 100 percent consistent and everything is as green as possible, the sustainability plan is the best out there," she said in a July interview.

In June, an executive at JPMorgan Chase & Co. voiced concerns about many ESG bond projects landing on his desk.

Issuers increasingly face reputational risk when issuing ESG debt that may not yet be fit for purpose.

Chanel was recently criticized for failing to meet an interim renewable energy target in 2021 on a sustainability-related bond.

And last year, it emerged that an ESG bond from grocery chain Tesco was based on targets that covered just 2% of annual emissions.