ReportDOI
Financing the Response to Climate Change: The Pricing and Ownership of U.S. Green Bonds
Malcolm Baker,Malcolm Baker,Daniel Bergstresser,George Serafeim,Jeffrey Wurgler,Jeffrey Wurgler +5 more
TLDR
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.read more
Citations
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A Theory of Socially Responsible Investment
TL;DR: In this paper, the authors characterize necessary conditions for socially responsible investors to impact firm behavior in a setting in which firm production generates social costs and is subject to financing constraints, and propose a micro-founded ESG metric to capture not only a firm's social status quo but also the counterfactual social costs produced in the absence of socially responsible investor.
Journal ArticleDOI
Analyzing the Characteristics of Green Bond Markets to Facilitate Green Finance in the Post-COVID-19 World
TL;DR: In this paper, a comparative study of the characteristics, risks, and returns of green bonds based on the region is presented. But the authors highlight the high level of risks and low returns associated with green bonds, and they do not contest their effectiveness in fighting climate change.
Journal ArticleDOI
Climate Regulatory Risks and Corporate Bonds
TL;DR: This paper found that firms with poor environmental profiles or high carbon footprints tend to have lower credit ratings and higher yield spreads, particularly when located in a state with stricter regulatory enforcement, and also found changes in the composition of institutional ownership changes.
Journal ArticleDOI
Climate change news risk and corporate bond returns
Thanh D. Huynh,Ying Xia +1 more
TL;DR: In this paper, the authors examine whether climate change news risk is priced in corporate bonds and find that bonds with a higher news beta earn lower future returns, consistent with the asset pricing implications of demand for bonds with high potential to hedge against climate risk.
Book
ESG and Responsible Institutional Investing Around the World: A Critical Review
TL;DR: In this paper, a survey examines the vibrant academic literature on environmental, social, and governance (ESG) investing, focusing on institutional investors who have become the largest holders of shares in public companies globally.
References
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Journal ArticleDOI
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.
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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.
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The Wages of Social Responsibility
Meir Statman,Denys Glushkov +1 more
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.