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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
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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.read more
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The Importance of Climate Risks for Institutional Investors
TL;DR: According to a survey about climate risk perceptions, institutional investors believe climate risks have financial implications for their portfolio firms and that these risks, particularly regulatory risks, already have begun to materialize.
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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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Sustainable investing in equilibrium
TL;DR: In this article, the authors model investing that considers environmental, social, and governance (ESG) criteria and find that green assets have low expected returns because investors enjoy holding them and because green assets hedge climate risk.
Journal ArticleDOI
Corporate green bonds
TL;DR: The authors examine corporate green bonds, whose proceeds finance climate-friendly projects, and show that investors respond positively to the issuance announcement, a response that is stronger for first-time issuers and bonds certified by third parties.
Journal ArticleDOI
Corporate Green Bonds
TL;DR: The authors examine corporate green bonds, whose proceeds finance climate-friendly projects, and find that investors respond positively to the issuance announcement, a response that is stronger for first-time issuers and bonds certified by third parties.
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Posted Content
Green bond finance and certification
TL;DR: Green bonds have been priced at issuance at a premium on average relative to conventional bonds, but their performance in the secondary market over time has been similar as discussed by the authors, and a relatively large share of green bonds are in sectors subject to environmentally related credit risks.
Journal ArticleDOI
Does Ethical Investing Impose a Cost Upon the Firm? A Theoretical Perspective
James J. Angel,Pietra Rivoli +1 more
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Sin Stocks Revisited: Resolving the Sin Stock Anomaly
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TL;DR: In this paper, the authors further investigate the notion that sin stocks are shunned to such an extent that they become systematically underpriced, enabling investors who are willing to bear the reputation risk involved with investing in these stocks to earn a return premium.
Journal ArticleDOI
A Theory of Socially Responsible Investment
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