Abstract
AbstractThe green bond market is growing substantially, bringing with it a focus on economic and environmental performance. Yet while extensive work exists examining the former, there is little concrete evidence regarding the efficacy of green bond use‐of‐proceeds. Concurrently, the demand for ESG‐compliant investments provides an opportunity to direct capital toward the rehabilitation of one of the most energy‐intensive asset classes: real estate. One program in this space, the Fannie Mae Green Rewards green bond program, offers incentives to borrowers to increase multifamily building energy and water efficiency. Although all program participants must complete a set of preapproved projects targeting energy and water efficiency within 12 months of loan origination, there exists substantial variation in the realization of postorigination efficiency outcomes, and in the variation between projected and actual efficiency improvements. We find that fixed interest rates and supplemental financing loan structures are associated with postorigination energy efficiency improvements, as are newer, larger, and high‐quality assets. However, the ex ante estimates of efficiency savings provided to prospective investors prove unrelated to the efficiency outcomes. These findings highlight opportunities to improve program transparency and calibration across the green bond universe.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
