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Do investors benefit from investing in stocks of green bond issuers?

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  • Badía, Guillermo
  • Cortez, Maria Céu
  • Silva, Florinda

Abstract

We investigate the environmental and financial performance of portfolios comprising stocks from worldwide green bond issuers compared to matched non-green but otherwise similar portfolios. Portfolios formed by stocks of green bond issuing companies show superior environmental performance, notably reflected in reduced CO2 emissions over the medium to long term. Furthermore, these portfolios exhibit financial performance, as measured by the five-factor model of Fama and French (2015), at least comparable to their non-green counterparts, even outperforming them over a 12-month investment horizon. Overall, investing in stocks of green bond issuers seemingly offers competitive risk-adjusted returns.

Suggested Citation

  • Badía, Guillermo & Cortez, Maria Céu & Silva, Florinda, 2024. "Do investors benefit from investing in stocks of green bond issuers?," Economics Letters, Elsevier, vol. 242(C).
    • Handle: RePEc:eee:ecolet:v:242:y:2024:i:c:s0165176524003434
    DOI: 10.1016/j.econlet.2024.111859
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    1. Sreenu, Nenavath, 2024. "The impact of Fintech and green bonds on the Indian renewable energy production," Renewable Energy, Elsevier, vol. 237(PC).

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    More about this item

    Keywords

    Green finance; Green bonds; Green stock portfolios; Portfolio performance;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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