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Green Bonds: New Label, Same Projects

Author

Listed:
  • Pauline Lam
  • Jeffrey Wurgler

Abstract

Green finance emphasizes “additionality,” meaning funded projects should offer distinct environmental benefits beyond standard practice. Analysis of U.S. corporate and municipal green bonds, however, indicates that the vast majority of green bond proceeds is used for refinancing ordinary debt, continuing ongoing projects, or initiating projects without green aspects that are novel for the issuer. Only 2% of corporate and municipal green bond proceeds initiate projects with clearly novel green features. Investors and market participants also do not distinguish among levels of additionality: Offering yields, announcement effects, green bond index inclusion, and green bond fund holdings are uncorrelated with additionality.

Suggested Citation

  • Pauline Lam & Jeffrey Wurgler, 2024. "Green Bonds: New Label, Same Projects," NBER Working Papers 32960, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32960
    Note: CF EEE
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    More about this item

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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