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Green bonds as a tool against climate change?

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  • Serena Fatica
  • Roberto Panzica

Abstract

Although green bonds are becoming increasingly popular in the corporate finance practice, little is known about their implications and effectiveness in terms of issuers' environmental engagement. With the use of matched bond‐issuer data, we test whether green bond issues are associated to a reduction in total and direct (Scope 1) emissions of nonfinancial companies. We find that, compared with conventional bond issuers with similar financial characteristics and environmental ratings, green issuers display a decrease in the carbon intensity of their assets after borrowing on the green segment. The decrease in emissions is more pronounced, significant and long‐lasting when we exclude green bonds with refinancing purposes, which is consistent with an increase in the volume of climate‐friendly activities due to new projects. We also find a larger reduction in emissions in case of green bonds that have external review, as well as those issued after the Paris Agreement.

Suggested Citation

  • Serena Fatica & Roberto Panzica, 2021. "Green bonds as a tool against climate change?," Business Strategy and the Environment, Wiley Blackwell, vol. 30(5), pages 2688-2701, July.
    • Handle: RePEc:bla:bstrat:v:30:y:2021:i:5:p:2688-2701
    DOI: 10.1002/bse.2771
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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