Testing green bond issuance impact on total Co2 emissions of top Esg score corporations: evidence from the US

Abstract

Although green bonds are becoming more common, there is limited evidence about their implications and effectiveness. Using difference-in-differences specification and unexploited data from 2016 to 2022, I investigate the green bond issuance impact on total CO2 emissions of sustainable corporations. Amongst top ESG score American firms, I find that, compared with regular bond issuers with analogous financial and environmental characteristics, green bond issuers improve their environmental performance (i.e., decrease total CO2 emissions) after borrowing on the green market. Overall, sustainable investing seems to turn "green" firms greener by reducing their emissions post-issuance, prominently in the long run.