Cui prodest? The heterogeneous impact of green bonds on companies' ESG score

Alessandro Moro () and Andrea Zaghini ()
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Alessandro Moro: Bank of Italy
Andrea Zaghini: Bank of Italy

No 1499, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: With the aim of providing a comprehensive framework of analysis, this paper develops a signalling model in which green bonds enable companies to disclose the adoption of clean production processes. Given that investors exhibit environmental preferences, companies that rely on green technologies benefit from lower financing costs and are able to improve their environmental performance. Specifically, green bonds encourage more polluting companies to start transitioning towards cleaner production. Using a large global sample of companies and a difference-in-differences strategy, we successfully test the model's implications. The analysis also reveals that green bonds issued to finance mitigation activities are the most effective in improving companies' environmental performance. In line with the model's predictions, these bonds display the largest yield differential (greenium) compared with their conventional counterparts.

Keywords: sustainable finance; ESG scores; green bonds; greenium; corporate bonds (search for similar items in EconPapers)
JEL-codes: G11 G12 G24 Q51 Q56 (search for similar items in EconPapers)
Date: 2025-10
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