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Green bonds and carbon emissions: exploring the case for a rating system at the firm level

Author

Listed:
  • Torsten Ehlers
  • Benoit Mojon
  • Frank Packer

Abstract

Green bonds are debt instruments whose proceeds finance projects with various environmental benefits - including climate change mitigation. So far, however, green bond projects have not necessarily translated into comparatively low or falling carbon emissions at the firm level. We discuss the potential benefits of a firm-level rating based on carbon intensity (emissions relative to revenue) to complement existing project-based green labels. We argue that such a rating system could provide a useful signal to investors and encourage firms to reduce their carbon footprint.

Suggested Citation

  • Torsten Ehlers & Benoit Mojon & Frank Packer, 2020. "Green bonds and carbon emissions: exploring the case for a rating system at the firm level," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:2009c
    as

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    References listed on IDEAS

    as
    1. Patrick Bolton & Morgan Despres & Luiz Awazu Pereira da Silva & Frédéric Samama & Romain Svartzman, 2020. "The green swan," BIS Books, Bank for International Settlements, number 31.
    2. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
    3. Itzhak Ben-David & Stefanie Kleimeier & Michael Viehs, 2018. "Exporting Pollution: Where Do Multinational Firms Emit CO₂?," NBER Working Papers 25063, National Bureau of Economic Research, Inc.
    4. Torsten Ehlers & Frank Packer, 2017. "Green bond finance and certification," BIS Quarterly Review, Bank for International Settlements, September.
    5. Ingo Fender & Mike McMorrow & Vahe Sahakyan & Omar Zulaica, 2020. "Reserve management and sustainability: the case for green bonds?," BIS Working Papers 849, Bank for International Settlements.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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