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Financing the Response to Climate Change: The Pricing and Ownership of U.S. Green Bonds

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In this article, the authors study green bonds, which are bonds whose proceeds are used for environmentally sensitive purposes, and find that green municipal bonds are issued at a premium to otherwise similar ordinary bonds.
Abstract
We study green bonds, which are bonds whose proceeds are used for environmentally sensitive purposes. After an overview of the U.S. corporate and municipal green bonds markets, we study pricing and ownership patterns using a simple framework that incorporates assets with nonpecuniary utility. As predicted, we find that green municipal bonds are issued at a premium to otherwise similar ordinary bonds. We also confirm that green bonds, particularly small or essentially riskless ones, are more closely held than ordinary bonds. These pricing and ownership effects are strongest for bonds that are externally certified as green.

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Exponential Growth of Sustainable Debt: Green Bonds Surge

Hyun Woo Park
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References
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Socially responsible investments: Institutional aspects, performance, and investor behavior

TL;DR: In this paper, the authors provide a critical review of the literature on socially responsible investments (SRI) and conclude that existing studies hint but do not unequivocally demonstrate that SRI investors are willing to accept suboptimal financial performance to pursue social or ethical objectives.
Journal ArticleDOI

The Effect of Green Investment on Corporate Behavior

TL;DR: In this paper, the authors explore the effect of exclusionary ethical investing on corporate behavior in a risk-averse, equilibrium setting and show that it leads to polluting firms being held by fewer investors since green investors eschew polluting stocks.
Journal ArticleDOI

The effect of pro-environmental preferences on bond prices: Evidence from green bonds

TL;DR: In this paper, the authors used green bonds as an instrument to identify the effect of non-pecuniary motives, specifically pro-environmental preferences, on bond market prices.
Journal ArticleDOI

The Wages of Social Responsibility

TL;DR: This article analyzed returns during 1992-2007 of stocks rated on social responsibility by KLD and found that this tilt gave socially responsible investors a return advantage relative to conventional investors, but the return advantage of tilts toward stocks of companies with high social responsibility scores is largely offset by the return disadvantage that comes from the exclusion of stocks of'shunned' companies.
Journal ArticleDOI

Disagreement, Tastes, and Asset Prices

TL;DR: The authors provide a simple framework for studying how disagreement and tastes for assets as consumption goods can affect asset prices, and propose a model to estimate the probability distributions of future payoffs on assets.
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What are the relavent between green bond markets ownership structureand small and micro businesses?

The provided paper does not discuss the relevant between green bond markets ownership structure and small and micro businesses.