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Green bonds: Do investors benefit from third-party certification?

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  • Zirek, Duygu
  • Unsal, Omer

Abstract

This study investigates whether green-bond certification benefits climate-risk-concerned investors. We compare the performance of green bonds and their degree of compliance with the Green Bond Principles and find that certification appears to play no role in bond performance—bonds with different certification tiers are indistinguishable from others. However, bond characteristics, such as issuer type and bond domicile, are significant factors in the review. We argue that, while review and certification might not have a visible impact on performance, firms may resort to the certification scheme to increase their attractiveness. Our paper highlights the need for a more robust classification system that allows investors to better differentiate green and conventional bonds.

Suggested Citation

  • Zirek, Duygu & Unsal, Omer, 2023. "Green bonds: Do investors benefit from third-party certification?," Global Finance Journal, Elsevier, vol. 58(C).
    • Handle: RePEc:eee:glofin:v:58:y:2023:i:c:s1044028323000674
    DOI: 10.1016/j.gfj.2023.100872
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    More about this item

    Keywords

    Certification; Fixed-income securities; Green bonds; Sustainable development;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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