Corporate green bonds

Caroline Flammer

Journal of Financial Economics, 2021, vol. 142, issue 2, 499-516

Abstract: I examine corporate green bonds, whose proceeds finance climate-friendly projects. These bonds have become more prevalent over time, especially in industries where the environment is financially material to firm operations. I show that investors respond positively to the issuance announcement, a response that is stronger for first-time issuers and bonds certified by third parties. The issuers improve their environmental performance post-issuance (i.e., higher environmental ratings and lower CO2 emissions) and experience an increase in ownership by long-term and green investors. Overall, the findings are consistent with a signaling argument—by issuing green bonds, companies credibly signal their commitment toward the environment.

Keywords: Sustainable finance; Climate change; Green bonds; Impact investing; Corporate sustainability (search for similar items in EconPapers)
JEL-codes: G14 G32 M14 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (137)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:142:y:2021:i:2:p:499-516

DOI: 10.1016/j.jfineco.2021.01.010

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