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Green Bonds: Shades of Green and Brown

In: Risks Related to Environmental, Social and Governmental Issues (ESG)

Author

Listed:
  • Moritz Immel

    (Technical University of Darmstadt)

  • Britta Hachenberg

    (Technische Hochschule Köln)

  • Florian Kiesel

    (Grenoble Ecole de Management)

  • Dirk Schiereck

    (Technical University of Darmstadt)

Abstract

We analyse the existence of a green bond premium and find a negative premium of 8 to 14 basis points. We are further interested in the influence of ESG ratings on green bonds to determine if investors differentiate between the shade of green. Examining a unique dataset of green bonds, we find a statistically significant influence of ESG ratings on bond spreads. A one-point increase in the weighted average ESG score leads to a decrease in the spread of 6 to 13 basis points. Interestingly, the results are not driven by the environmental friendliness of the green bond issuer, but through the company’s governance.

Suggested Citation

  • Moritz Immel & Britta Hachenberg & Florian Kiesel & Dirk Schiereck, 2022. "Green Bonds: Shades of Green and Brown," Springer Books, in: Marielle de Jong & Dan diBartolomeo (ed.), Risks Related to Environmental, Social and Governmental Issues (ESG), pages 21-34, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-18227-3_3
    DOI: 10.1007/978-3-031-18227-3_3
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