Evaluating stakeholder perspectives on why social capital creates value in the green bond market within the real estate and construction sectors

Subhadarsini Parida, Cida Ghosn and Christhina Candido

ERES from European Real Estate Society (ERES)

Abstract: Social capital is a growing factor in green bond pricing (Chen et al., 2024) where community support and societal trust can influence bond premiums, making green bonds more attractive financially. The 'green premium' can be seen as a manifestation of social capital, where investors are motivated not only by financial returns but also by the social and environmental impacts of their investments (MacAskill et al., 2021). As investor sentiment is often shaped by social capital (Piñeiro-Chousa et al., 2021), communities with strong social networks may foster a more favourable view of green investments. However, there remains a notable gap in the literature regarding the direct application of social capital to the green bond market within the context of the real estate and construction sectors. There is a lack of empirical research that explicitly connects social capital to the green bond market within the real estate and construction sectors. It is important to understand the financial aspects of green building projects, suggesting that social networks can play a pivotal role in overcoming financial barriers (Agyekum et al., 2022). Therefore, this paper investigates how social capital metrics—like community trust, corporate social responsibility (CSR) perception, and stakeholder engagement—impact green bond financing success in real estate and construction. It is based on the stakeholder theory, the collaboration among stakeholders, including building owners, investors, and local communities to address a gap in understanding the non-financial factors influencing green bond viability. This study will employ semi-structured interviews from corporate C suites, and developers to understand the measurable social benefits and value proposition to clients and investors when green bonds and/or green investment have been used. Additionally, the study aims to develop a framework for integrating social capital metrics into green bond assessments, providing investors with a more holistic view of sustainability projects. This research offers significant contributions for stakeholders in the real estate and construction sectors, particularly corporate executives, developers, and investors focused on green bond funding for sustainable projects. By integrating social capital metrics into project evaluations, the study advances understanding of how corporate leaders and developers can leverage these insights by integrating social capital elements to make projects more attractive to investors by reducing risk perceptions and boosting investor sentiment. Further, by valuing social capital metrics, investors gain insights from this study into a project’s long-term stability, supporting a shift in investment focus from purely financial gains to broader environmental and social impacts. References Agyekum, K., Goodier, C., & Oppon, J. A. (2022). Key drivers for green building project financing in Ghana. Engineering, Construction and Architectural Management, 29(8), 3023-3050. Chen, H., Meng, Y., Ning, X., & Qi, Y. (2024). The pricing of green bonds: Does social capital matter? Evidence from China. Finance Research Letters, 67, 105756. MacAskill, S., Roca, E., Liu, B., Stewart, R. A., & Sahin, O. (2021). Is there a green premium in the green bond market? Systematic literature review revealing premium determinants. Journal of cleaner production, 280, 124491. Piñeiro-Chousa, J., López-Cabarcos, M. Á., Caby, J., & Ševi, A. (2021). The influence of investor sentiment on the green bond market. Technological Forecasting and Social Change, 162, 120351.

Keywords: Esg; Green Bonds; Social Capital (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-env, nep-mac, nep-ppm and nep-ure
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