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Financial Management. Green Bonds – Success or Failure?

Author

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  • Hammer, Thomas
  • Siegfried, Patrick

Abstract

This text will explain which role “Green Bonds” play in financing projects and how the green factor is weighted. It will be discussed on how the term “green” can change the price of the bond, if there is a “green premium” and for which group of investors this type of bond is interesting. We will discuss ways to reduce their cost of capital, also considering the risks and on ways on how to improve their conditions. The sustainable and eco-friendly aspects are also highlighted in this text and they might become crucial in future investing, which gives the bond an interesting role.

Suggested Citation

  • Hammer, Thomas & Siegfried, Patrick, 2021. "Financial Management. Green Bonds – Success or Failure?," MPRA Paper 111394, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:111394
    as

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    File URL: https://mpra.ub.uni-muenchen.de/111394/1/MPRA_paper_111394.pdf
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    References listed on IDEAS

    as
    1. Wulandaria, Febi & Schäfer, Dorothea & Stephan, Andreas & Sun, Chen, 2018. "Liquidity risk and yield spreads of green bonds," Ratio Working Papers 305, The Ratio Institute.
    2. Olivier David Zerbib, 2019. "The effect of pro-environmental preferences on bond prices: Evidence from green bonds," Post-Print halshs-02008641, HAL.
    3. Shogren, Jason F. & Toman, Michael, 2000. "Climate Change Policy," Discussion Papers 10767, Resources for the Future.
    4. Sally Kane & Jason Shogren, 2000. "Linking Adaptation and Mitigation in Climate Change Policy," Climatic Change, Springer, vol. 45(1), pages 75-102, April.
    5. Febi, Wulandari & Schäfer, Dorothea & Stephan, Andreas & Sun, Chen, 2018. "The impact of liquidity risk on the yield spread of green bonds," Finance Research Letters, Elsevier, vol. 27(C), pages 53-59.
    6. Zerbib, Olivier David, 2019. "The effect of pro-environmental preferences on bond prices: Evidence from green bonds," Journal of Banking & Finance, Elsevier, vol. 98(C), pages 39-60.
    7. Flammer, Caroline, 2021. "Corporate green bonds," Journal of Financial Economics, Elsevier, vol. 142(2), pages 499-516.
    8. Flaherty, Michael & Gevorkyan, Arkady & Radpour, Siavash & Semmler, Willi, 2017. "Financing climate policies through climate bonds – A three stage model and empirics," Research in International Business and Finance, Elsevier, vol. 42(C), pages 468-479.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Green Bonds; ESG; Sustainability; COP21;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

    NEP fields

    This paper has been announced in the following NEP Reports:

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