The Impact of Corporate ESG Performance on Its Cost of Green Bond Financing: An Empirical Study

Within the framework of sustainable development, the Environmental, Social, and Governance (ESG) metrics of corporate entities have emerged as vital indicators for assessing long-term viability and serve as a crucial reference for the assessment of companies by investors and other stakeholders. It has been posited that entities exhibiting a superior ESG profile are more likely to adhere to responsibility standards and enhance their corporate reputation, potentially resulting in reduced costs of capital when seeking funds through green debt instruments. To evaluate the veracity and reliability of this hypothesis, the study endeavors to elucidate the specific influences of ESG performance on the green bond financing costs incurred by corporations. As a basis for empirical inquiry, an initial dataset comprising firms listed on the Shanghai, Shenzhen, and Beijing stock exchanges from 2015 to 2023 was utilized. The ESG performance scores provided by SynTao Green Consulting Company served as a metric for evaluating the ESG standings of these listed entities. Findings from the research indicate a correlation whereby corporations with heightened ESG performance are subject to reduced costs associated with green bond financing. Furthermore, results suggest that variations across different industries may lead to divergent outcomes regarding the influence of ESG performance on financing costs. This analysis underscores the significance of ESG considerations in the financial strategizing of firms, particularly in relation to sustainable finance instruments.