Working Paper: NBER ID: w25194
Authors: Malcolm Baker; Daniel Bergstresser; George Serafeim; Jeffrey Wurgler
Abstract: We study green bonds, which are bonds whose proceeds are used for environmentally sensitive purposes. After an overview of the U.S. corporate and municipal green bonds markets, we study pricing and ownership patterns using a simple framework that incorporates assets with nonpecuniary utility. As predicted, we find that green municipal bonds are issued at a premium to otherwise similar ordinary bonds. We also confirm that green bonds, particularly small or essentially riskless ones, are more closely held than ordinary bonds. These pricing and ownership effects are strongest for bonds that are externally certified as green.
Keywords: Green Bonds; Climate Change; Socially Responsible Investing
JEL Codes: G12; Q52; Q53; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| green bonds (H74) | nonpecuniary benefits (J32) |
| green municipal bonds (H74) | premium pricing (D49) |
| certification of green bonds (Q48) | premium pricing (D49) |
| investor preferences for environmental considerations (F64) | concentration of green bond holdings (G15) |