Information Asymmetries in the Green and Sustainable Bond Market: The Role of Second-Party Opinion (SPO) Providers

Jordan Mitchell, Throstur Olaf Sigurjonsson, Nikolaos Kavadis (), Ahmad Rahnema Alavi and Stefan Wendt
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Jordan Mitchell: University of Iceland [Reykjavik]
Throstur Olaf Sigurjonsson: University of Iceland [Reykjavik]
Nikolaos Kavadis: CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine
Ahmad Rahnema Alavi: IESE Business School - IESE Business School
Stefan Wendt: Reykjavík University - Reykjavík University

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Abstract: Second-party opinions (SPOs) are the most common type of external review for green, social, sustainable, and sustainability—linked (GSS +) bonds. Yet, there is a dearth of research on SPO providers and how they perform their role as information intermediaries. From a practical standpoint, understanding more about SPO providers is vital since they aim to reduce information asymmetry between issuers and investors. Their work enhances transparency and supports the growth of GSS + bonds, key instruments for the transition to greater sustainability. Drawing from interviews with six European SPO providers and other industry participants, this study reveals the main challenges that SPO providers face: multiple layers of information asymmetries (between the issuer and SPO and within the issuer itself), alignment of issuer and SPO provider goals, and compliance with standards and regulations. The study also shows how SPO providers attempt to overcome these challenges through policies, assets, and governance of their business models. We discuss contributions for theory and practice.

Date: 2025-05-05
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Published in Journal of Management and Governance, 2025, ⟨10.1007/s10997-025-09740-4⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05056821

DOI: 10.1007/s10997-025-09740-4

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