Green Bonds: New Label, Same Projects

Pauline Lam and Jeffrey Wurgler

No 32960, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Green finance emphasizes “additionality,” meaning funded projects should offer distinct environmental benefits beyond standard practice. Analysis of U.S. corporate and municipal green bonds, however, indicates that the vast majority of green bond proceeds is used for refinancing ordinary debt, continuing ongoing projects, or initiating projects without green aspects that are novel for the issuer. Only 2% of corporate and municipal green bond proceeds initiate projects with clearly novel green features. Investors and market participants also do not distinguish among levels of additionality: Offering yields, announcement effects, green bond index inclusion, and green bond fund holdings are uncorrelated with additionality.

JEL-codes: G10 G32 Q50 (search for similar items in EconPapers)
Date: 2024-09
New Economics Papers: this item is included in nep-ene, nep-env, nep-fmk, nep-ipr and nep-ppm
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