The green bond premium and non-financial disclosure: Financing the future, or merely greenwashing

Abstract

the green bond premium and non-financial disclosure: financing the future, or merely greenwashing? master’s thesis maastricht university tom bour 1st supervisor: prof. dr. piet eichholtz 2nd supervisor: dr. nils kok january 2019 abstract this paper identifies the existence of a green bond premium by showing that investors are willing to receive a lower yield of -23.2 basis points compared to otherwise similar conventional bonds in the secondary market. the results show that the green bond premium varies significantly across bond ratings, currencies, and issuer sectors. additionally, this paper studies the relationship between the variation of the green bond premium and bond non-financial disclosure. a matching method is used to compare the yield spread of a green and an otherwise similar synthetic conventional bond. this paper charts the landscape of green bond voluntary non-financial disclosure by constructing a proprietary dataset in which all bond-specific non-financial disclosures are recorded. a two-step regression procedure is used to identify that green bond nonfinancial disclosure is the primary determinant in the variation of green bond yield spreads. external review is shown to have the strongest effect on the size of the green bond premium, while alignment with alignment with the green bond principles and cbi certification show no additional effect. the results provide evidence against the argument that green bonds are merely a tool for greenwashing, as investors …

Source: pdf_first_chars