Does issuance of green bonds make firms more environmentally friendly?
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School of Business |
Master's thesis
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en
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58
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Abstract
This paper studies the effects of corporate green bonds on a firm-level. Green bonds are fixed income securities which are intended to finance environment friendly investments. Green bonds, and especially corporate green bonds, have been seen one of the catalysts moving towards more environmentally friendly, low-carbon economy. I have a set of 75 companies that have issued green bonds between 2014-2018 and have sufficient amount of environment data. I study whether issuing of green bond has an effect on company’s e.g., environment scores or CO2 emissions. The results show that green bonds might reduce firms’ CO2 emissions and improve waste recycling, but perhaps also reduce innovation. The trends are clear but at the same time the statistical significance is debatable. One possible explanation is that there is not enough data to conduct a trustworthy empirical analysis. Therefore, at least for now, we cannot make any conclusions about the effects of corporate green bonds on firm’s greenness. Hence, we have to be cautious when speaking about the causal effects of corporate green bonds. We don’t know yet if they really make firms greener, are they just a form of green washing or do corporates green bonds have other channels how they effect on climate change. The market size is still relatively small and young and environment scores are in the stage of development, which makes it hard to perform reliable studies. However, this doesn’t mean that these studies are unnecessary. We need new information about the market to exclude the possibility of green wash and to make the market more efficient. Hence, the field requires more study as more data comes available.Description
Thesis advisor
Kaustia, MarkkuSarvimäki, Matti