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Sustainability bond, sustainability-linked bond, and firms' environmental performance

Author

Listed:
  • Shimauchi, Takuto
  • Fukui, Masaki
  • Yamamoto, Daiki
  • Taura, Yuto
  • Kameda, Keigo

Abstract

The issuance of green bonds, which channel toward green projects, has surged in recent years. However, sustainability and sustainability-linked bonds, which have looser restrictions on the use of funds than green bonds, also allocate funds to support green initiatives. While research on these bonds is expanding, no study has examined whether the issuance of sustainability and sustainability-linked bonds leads to enhancements in environmental performance. To address this gap, our study investigates the relationship between the issuance of sustainability bonds and sustainability-linked bonds and corporate environmental performance using a difference-in-difference approach with an event study methodology. Our findings suggest that the issuance of sustainability and sustainability-linked bonds does not contribute to improving corporate environmental performance. Therefore, implementing strict regulations on the use of proceeds is crucial to ensure the effectiveness of these bonds.

Suggested Citation

  • Shimauchi, Takuto & Fukui, Masaki & Yamamoto, Daiki & Taura, Yuto & Kameda, Keigo, 2025. "Sustainability bond, sustainability-linked bond, and firms' environmental performance," International Review of Financial Analysis, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:finana:v:102:y:2025:i:c:s1057521925002145
    DOI: 10.1016/j.irfa.2025.104127
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    More about this item

    Keywords

    Sustainability bonds; Sustainability-linked bonds; Green bonds; Environmental performance; Difference-in-differences; Event study;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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