Green Bonds Research Articles

Should South Asian Stock Market Investors Think Globally? Investigating Safe Haven Properties and Hedging Effectiveness

In this study, we examine the critical question of whether global equity and bond assets (both green and non-green) offer effective hedging and safe haven properties against stock market risks in South Asia, with a focus on Bangladesh, India, Pakistan, and Sri Lanka. The increasing integration of global financial markets and the volatility experienced during recent economic crises raise important questions regarding the resilience of South Asian markets and the potential protective role of global assets. Drawing on methods like VaR and CVaR tail risk estimators, the DCC-GJR-GARCH time-varying connectedness approach, and cost-effectiveness tools for hedging, we analyze data spanning from 2014 to 2022 to assess these relationships comprehensively. Our findings demonstrate that stock markets in Bangladesh experience lower levels of downside risk in each quantile; however, safe haven properties from the global financial markets are effective for Bangladeshi, Indian, and Pakistani stock markets during the crisis period. Meanwhile, the Sri Lankan stock market neither receives hedging usefulness nor safe haven benefits from the same marketplaces. Additionally, global green assets, specifically green bond assets, are more reliable sources to ensure the safest investment for South Asian investors. Finally, the portfolio implications suggest that while traditional global equity assets offer ideal portfolio weights for South Asian investors, global equity and bond assets (both green and non-green) are the cheapest hedgers for equity investors, particularly in the Bangladeshi, Pakistani, and Sri Lankan stock markets. Moreover, these results hold significant implications for investors seeking to optimize portfolios and manage risk, as well as for policymakers aiming to strengthen regional market resilience. By clarifying the protective capacities of global assets, particularly green ones, our study contributes to a nuanced understanding of portfolio diversification and financial stability strategies within emerging markets in South Asia.

The impact of green bond for achieving sustainable development goals

The impact of green bond for achieving sustainable development goals

Quantile Connectedness Amongst Green Assets Amid COVID-19 and Russia–Ukraine Tussle

With the advent of greening the global economy and the introduction of green financial assets, this study examines the connectedness and spillover effect of green assets using a QVAR approach focusing on the average connectedness and connectedness under extreme market conditions. The time of the study captures the crucial global incidents of COVID-19 and Russia–Ukraine war to investigate the effect of major incidents on the connectedness of green assets. The results of the QVAR analysis reveal that green assets are moderately connected under normal market conditions; however, their connection is strengthened under extreme market conditions. IOTA and SP Green Bonds are the net receivers of shocks from other assets, and SP Green Bonds are connected to green energy indices and green cryptocurrencies during turbulent markets. Since green cryptocurrencies are closely connected, a lower portion of them should be added to portfolios, whereas SP Green Bonds qualify as a good diversifying agent in a portfolio. The study has significant implications for market participants, investors, and policymakers.

Global Research Trends in Green Finance: A Systematic Literature Review of Regional Contributions (2001-2024)

This study presents the systematic analysis of existing literature on global research trends in green finance, focusing on regional contributions from 2001 to 2024. Using data from the Web of Science and Scopus databases, this analysis identifies patterns in publication volume, regional leadership, and thematic evolution in green finance research. The findings reveal a substantial increase in scholarly output, particularly in response to climate agreements such as the Paris Agreement and the Sustainable Development Goals. Notably, countries like China, the United Kingdom, and emerging contributors, including Pakistan, are leading in research output. The study underscores a shift from foundational studies on sustainable finance to specific applications in green bonds, ESG criteria, and climate finance. Additionally, it highlights strong international co-authorship networks, especially among researchers in Europe, North America, and Asia, which facilitate cross-border collaboration and knowledge dissemination.

Ecological and economic effects of green financing

Currently, all three components of sustainable development at all levels are becoming increasingly important to ensure the existence and development of states. This article is devoted to green finance, linking economic and environmental aspects of development. Green financing is a policy direction to reduce negative environmental externalities and attract investment in new technologies, which has become widespread in recent years; green bonds are one of its most important instruments. To assess the impact of issuing green bonds on the environmental component, represented by the equivalent of carbon monoxide emissions, the article was the first to apply a matching procedure to evaluate company data obtained using the Refinitiv database. The authors showed a model specification that supports the hypothesis that the issuance of green bonds has an impact on reducing carbon monoxide equivalent emissions in the long term, but the results of the logarithmic specification of this model turned out to be unstable. From the calculations presented in the article it follows, that despite the fact that the effect of issuing green bonds does not have an immediate impact on the company’s environmental performance, but in the long run it can improve their performance. It helps to raise environmental rating of companies and, in turn, can help attract investments for the development of technologies and infrastructure that ensure technological independence, the use of promising energy sources, the best available technologies, and the transport greening.

Green bonds and carbon prices: a dynamic relationship revealed

Green bonds and carbon prices: a dynamic relationship revealed

Tail risk transmission between decomposed oil shocks and green finance markets: evidence from an EVT–TVP–VAR approach

ABSTRACT This paper provides a novel framework based on extreme value theory, i.e. the autoregressive conditional Fréchet–time-varying parameters–vector autoregression (AcF–TVP–VAR) framework, to explore the tail risk spillovers between decomposed oil shocks (supply, demand, and risk shocks) and green finance markets. The empirical results reveal that there are significant time-varying tail risk spillovers between the two markets, with spillovers intensifying during extreme events. Additionally, throughout the sample period, supply shock is found to be a net transmitter of tail risk, while clean energy market is a net receiver. Notably, the safe haven properties of green bond market are captured, indicating it can serve as a diversified investment option. The findings are important for financial investors and policymakers.

Does Greenium Exist? A Comparison between Sovereign and Corporate Bonds

Recent studies suggest that people when making investment decisions, evaluate risk according to their perception of eco-friendly commitment. These studies claim that preference to green investment influences prices and trading behaviour in market settings. Assets perceived greener on average trade at significantly higher prices with different performance between sovereign and corporate green bonds (Ehlers and Packer, 2017). Our paper refers to a sample of 5996 bond at world level divided equally in ordinary bond and green bonds. We tested a set of models to assess this new factor. The results confirm the presence of greenium, but it highlights that corporate bonds’ greenium is higher than sovereign one. Moreover, in developed markets, green bonds tend to exhibit characteristics of a greenium, whereas, in emerging markets, the environmental aspect is still developing. This observation supports the notion that greenium is more pronounced in mature markets with heightened environmental sensitivity. Differently from previous studies, we filter the model for bonds issued during the Covid19 pandemic and not, and the results suggests the presence of a greenium only in normal times (Zerbib, 2019a, 2019b). The analysis contributes to the research on the green bond market and its dynamics. We prove that greenium is not universally present or significant, especially in emerging markets. These insights are relevant for investors and policymakers considering the implications of green finance for sustainable development and climate change mitigation.

Do Commercial Ties Influence ESG Ratings? Evidence from Moody's and S&P

ABSTRACTWe provide the first evidence that conflicts of interest arising from commercial ties lead to bias in environmental, social, and governance (ESG) ratings. Using the acquisitions of Vigeo Eiris and RobecoSAM by Moody's and S&P as shocks to the commercial ties between ESG rating agencies and their rated firms, we show that, after their acquisitions by the credit rating agencies (CRAs), ESG rating agencies issue higher ratings to existing paying clients of the CRAs. This effect is greater for firms that have more intensive business relationships with the CRAs, but weaker for firms with more transparent ESG disclosures or higher long‐term institutional ownership. The upwardly biased ESG ratings help client firms issue more green bonds and enable the CRAs to maintain credit rating business. Finally, the upwardly biased ESG ratings are less informative of future ESG news. Overall, the business incentives of rating providers appear to engender ESG rating bias.

Mechanisms of international economic cooperation to support the global energy transition: ways to improve

The global energy transition is a complex process and requires deep international economic cooperation and joint efforts to achieve sustainable development. Effective interaction between countries, financial institutions and the private sector is essential to ensure sufficient investment in renewable energy and technological innovation. International financial mechanisms, such as green bonds, can significantly contribute to accelerating this process, but they must ensure access to resources for all participants, especially developing countries. Reforming the international financial system and developing new instruments for attracting private capital is an important step towards reducing risks and increasing the investment attractiveness of renewable energy projects. Removing barriers to investment in countries with unstable economies through the development of technical assistance programs and financial guarantees is also an important condition for success. The energy transition can only be successfully realized through a concerted international effort involving both developed and developing countries. A sustainable energy future and ambitious climate change targets can only be achieved through global cooperation, innovative financial solutions and technology sharing.

Критерії відповідності фінансового менеджменту емітента зелених облігацій

Introduction. A fundamental principle in the green bond market is the financing of projects that have a positive impact on the environment. Socially responsible investors want to be sure that the proceeds from the issuance of these securities are used as intended, and that the projects being financed contribute to the achievement of environmental goals. For this purpose, the relevant international standards have already been adopted on the green bond market. Problem Statement. In the green bond market, manipulation often occurs when the proceeds from the issuance of these securities are allocated to projects that are not actually environmentally friendly, although they are portrayed as such. Compliance of the financial management of the issuer of green bonds with generally accepted standards is always in the focus of attention of socially responsible investors. An urgent task is to measure the compliance of financial management with generally accepted standards, which will affect the future results of the issuer of green bonds in the distribution of income to achieve environmental goals. Purpose of the article is to identify the criteria for compliance of the green bond issuer's financial management with internationally recognized standards. Methods. The following research methods were used: the generalization method (when studying theoretical sources, scientific works of famous scientists and researchers on selected issues); methods of comparisons and synthesis (during the review of international acts, existing practices and standards), the method of analysis (to identify the criteria of compliance of financial management in the green bond market); logical method (for forming conclusions). Results. The article reveals the concept and features of financial management in the green bond market, examines global practices and standards for managing proceeds from the issuance of these securities. The principles and requirements that issuers of green bonds on the global and European markets should follow are summarized. On the basis of the conducted research, the criteria of compliance of financial management in the market of green bonds are singled out. Conclusions. The principles and methods contained in international standards and recommended acts on the green bond market provide a basis for measuring the compliance of the issuer's financial management with internationally recognized practices. The conducted research made it possible to single out the following criteria: 1) the ability to properly select and evaluate projects; 2) confirmation of the targeted direction of income; 3) availability of separate accounting of receipts; 4) organization of control over revenue management; 5) involvement of an independent third party in the control. Identified financial management compliance criteria make it possible to identify the green bond issuer's strengths and weaknesses for further improvement of its internal practices, increase transparency, and improve management processes and foundations. Checking the issuer of green bonds according to each of the criteria on a point basis allows establishing the general level of compliance of its financial management with the expectations of socially responsible investors.

Liquidity and Cost Advantage of Green Bonds

The prevailing scholarly consensus suggests that green bonds benefit from a “green premium” by offering a financing cost advantage over conventional bonds. However, our empirical study reveals significant differences in liquidity between green and conventional bonds that could affect this cost advantage. We investigate the variations in liquidity levels between these bond types and explore how these disparities influence the advantage in financing costs associated with green bonds. The findings show that, due to their unique attributes, green bonds tend to have lower liquidity than conventional bonds; this results in higher liquidity costs, which counterbalance the cost benefits of the green premium. The liquidity disadvantage of green bonds thus weakens the overall financing cost advantage they might otherwise offer through the green premium.

Green bonds and clean energy stocks: Safe havens against global uncertainties? A wavelet quantile-based examination

The renewable energy sector has seen rapid investment growth over the last decade, with Green Bonds (GB) and Clean Energy Stocks (CLE) emerging as critical components of sustainable finance. Using daily data from 2013 to 2023, this study investigates the diverse roles of GB and CLE as potential safe havens under Geopolitical Risks (GEO) and Economic Policy Uncertainty (ECU). Applying an advanced Wavelet Quantile Regression (WQR) approach, we assess their effectiveness across different time horizons and risk conditions. The findings reveal that GB consistently offer stronger protection against economic risks, particularly in the short to mid-term, while CLE are more effective in shielding against geopolitical risks. Over longer periods, GB maintain their safe haven status, while CLE’s protective capabilities diminish. The results also highlight that GB and CLE behave differently across quantiles, with GB showing stability across extreme market conditions, making it a more reliable hedge overall. This study offers valuable policy insights for key stakeholders. Policymakers are encouraged to integrate GB and CLE into sustainable finance strategies, investors can mitigate risk by blending these assets, and portfolio managers should adjust allocations dynamically based on evolving market conditions. The results underscore the importance of green assets as hedges in times of global uncertainty, contributing to the growing literature on sustainable finance.

The emergence of green finance a conceptual framework for environmental sustainability: innovation viewpoint

Background of the study This study intends to contribute to the continuing discussion about green economic growth by objectively investigating the consequences of clean energy generation, cutting-edge green practices, and ethical business on global sustainability. This study also examines how green finance laws effectively handle the financial limitations that companies face when pursuing green innovation. Green finance enables the development and implementation of sustainable business models, investments, trade, economic, environmental, and social projects through the effective utilization of financial resources. Methods This article offers a complete evaluation of the current state and advancements in green finance research using a mixed-methods approach, which includes bibliometric and qualitative analysis. We analysed a big dataset of research papers after entering the keywords into the Scopus database. Results This study found that green bank products include green securities, investments, climate financing, carbon finance, insurance, credit, and infrastructure bonds. Sustainability, sustainable development, investments, environmental economics, sustainable finance, green bonds, and the green economy dominate as a most prevalent theme. China has the strongest bibliometric linkages to other nations, followed by the US and UK. This study also examines whether green finance policies address firm financial restrictions while pursuing green innovation. VOS-viewer generates co-authorship-based keyword occurrence links and network maps. Conclusion Green finance strives to increase funding flows to sustainable development goals while mitigating environmental and social hazards. “Going green,” pricing, forecasting, modelling, picking the most efficient tool, and influencing investor behaviour toward environmentally friendly operations are all challenges. Environmental policies, interest rates, religion, risks, social inclusion, and banking laws all have an impact on bank green financing initiatives. The study’s main contribution is an overview of green finance breakthroughs for sustainability, which may help scholars and practitioners understand the trend and future research directions.

The real impacts of third-party certification on green bond issuances: Evidence from the Chinese green bond market

This study examines the real effects of third-party certification on green bond issuance by Chinese listed firms over the period 2016–2022. Our findings reveal that the issuance of certified (non-certified) green bonds results in favourable (non-significant or even negative) stock market reactions in both the short and long term, indicating that third-party certification adds value for stock investors. In addition, we analyse the underlying mechanisms that drive the value creation of third-party certification in green bond issuance. We find that third-party certification effectively reduces information asymmetries between firms and investors, induces firms to genuinely prioritise sustainable practices and improves firms' environmental performance, leading to increases in investor demand and firm value. Our further analysis reveals that third-party certification helps green bond issuers attract long-term investors, increases analyst coverage and induces positive opinions from the regulator on firm disclosure. Overall, this study documents that third-party certification of green bond issuers can generate real economic and environmental benefits for issuers.

Connectedness between green bonds, clean energy markets and carbon quota prices: Time and frequency dynamics

In this paper, we investigate the time and frequency dynamics of connectedness among green assets such as green bonds, clean energy markets, and carbon prices. Using daily price data, we explore return spillovers across these green financial markets by applying the novel framework on time and frequency dynamics proposed by Baruník and Krehlík (2018). This allows us to identify the direction of spillovers among our variables, and decompose the connectedness to differentiate between short-term and long-term return spillovers. Our results indicate that green bonds and carbon prices act as net receivers of shocks, but mainly in the short-term. We also observe a low level of connectedness among our clean energy markets across both low and high frequency bands, even during times of economic or political crisis. Additionally, there are periods in which connectedness between the clean energy assets is driven by the long-term. In periods of economic and political stability, carbon prices may also provide an interesting diversifying tool for short-term investors. Our results should be of interest for investors and portfolio managers who focus on green financial markets, by strengthening the notion that green financial markets can offer diversification opportunities, for both short-term and long-term investors. Policy makers could also benefit from our insights on conectedness in their work on short-term and long-term climate policies. This paper is the first to use this framework to investigate systematic risks within green financial markets.

Низкоуглеродное развитие России: вызовы и возможности в новых условиях

Russiaʼs model of economic development, based on hydrocarbon exports, initially determined the countryʼs scepticism to- ward low-carbon transformation. However, the growing negative effects of climate change, manifesting in increased natural disasters (floods, fires, extreme heat), as well as extraterritorial measures imposed by major trading partners, which could potentially limit market access, led to a transformation of the perceived climate change challenge and the adoption of a range of policy documents and regulations to articulate and implement a low-carbon development policy in Russia. The targets and measures have been criticized for lacking ambition and rigour, but still pushed the processes without which the economy would continue to face the negative effects of climate change and increasing constraintsin global markets. The geopolitical crisis of 2022 and widening sanctions have significantly constrained Russiaʼs ability to meet climate targets. Despite this, mechanisms to promote decarbonization in key sectors continue to be developed. In addition, opportunities for cooperation with some major non-western economies have not closed. This article analyzes Russiaʼs strategic documents and key low-carbon development policies, including the activities of major companies. It provides perspective on the role of forest climate projects as well astheir drawbacks and risks, the Sakhalin experiment to achieve carbon neutrality in the region and how it is implemented through concrete initiatives, the prospects and limitations of the hydrogen industry, the challenges and tools for decarbonizing transport, state of play in the carbon capture, use and storage technologies, the criteria for green projects, and the situation on the green bond market. It also identifies two important areas which gain importance as the climate transition scales up: nuclear power and the ex- traction and production of critical raw materials. Based on the analysis, recommendations are given on promising areas of cooperation between Russia and its BRICS and EAEU partners.

Determinants Of Reputable Underwriters In Green Bond Offering

This research paper delves into the process by which industrial companies issuing green bonds can secure certification from reputable underwriters. By analyzing data from international green corporate bond offerings from the period between 2014 and 2022, the study aims to unravel the factors that influence underwriter selection decisions. Using a logit model to address the potential biases, the research reveals specific firm and bond characteristics that significantly impact the likelihood of collaborating with reputable underwriters. The findings indicate that reputable underwriters exhibit a preference for larger firms demonstrating strong financial performance, dealing with larger bond sizes, and possessing distinct bond features such as callability and involvement in private placements. Additionally, variables like maturity periods, involvement in finance vehicles, credit ratings, and syndicate size emerge as crucial factors in underwriter selection processes. These insights highlight the critical factors that issuers must thoroughly assess when selecting underwriters with strong reputations. The significance role of underwriter credibility, capabilities, and reliability in shaping the landscape of green bond underwriting is emphasized. This analysis holds relevance for both academic research and industry practitioners within the realm of sustainable finance.

Exploring Greenium and the Determinants of Green Bond Performance in Asia

This study examines the presence and determinants of the ‘greenium’ in Asian green bonds. The dataset includes green bonds issued by governments and corporations in Asian countries from 2016 to 2022. To analyse the determinants of the greenium, we applied a coarsened exact matching (CEM) model, an advanced form of the matching method. Ordinary least squares (OLS) regression was employed to assess the factors influencing the greenium. Our findings indicate that a greenium exists in green bonds issued in Asia, with significant effects observed in China, Korea, and Japan. Key drivers of the greenium include coupon rates, issuer type, oil prices, and the federal funds rate. This study contributes practical insights by highlighting that a greenium can be achieved through strategic project selection, transparent communication, and strong environmental commitment. Additionally, investors should account for coupon rates, issuer sector, and macroeconomic factors such as oil prices and the federal funds rate when investing in green bonds.

Driving SMES towards Green Business: The Impact of Sustainable Marketing Mix on Performance and Loyalty in BNI'S Go Green Movement

Growing global concerns over environmental issues, such as climate change and pollution, have heightened the demand for sustainable business practices, particularly in the banking sector. Financial institutions support environmental sustainability through green finance by offering eco-friendly products like green loans and bonds. This study examines how BNI's Go-Green initiative enhances SME customer loyalty by incorporating the sustainable marketing mix, focusing on people, profit, and planet. A quantitative approach was used to assess the impact of the sustainable marketing mix on SME performance and customer loyalty within BNI's Go Green movement in Bukittinggi, Indonesia. A stratified random sample of 303 SMEs was selected from a population of 1,239. Data were gathered through structured questionnaires using a five-point Likert scale and analyzed using Structural Equation Modeling-Partial Least Squares (SEM-PLS). Confirmatory Factor Analysis (CFA) validated the measurement model, and the structural model assessed direct and indirect effects. The variable had the highest Average Variance Extracted (AVE) 0.873. Discriminant validity showed a strong correlation between business sustainability and customer loyalty (0.768). Place and Business Sustainability had significant positive effects on customer loyalty, while People and Planet had more limited impacts. This study introduces the expanded marketing mix people, profit, and planet into the green finance framework and highlights the underexplored mediating role of business sustainability in fostering SME customer loyalty. The findings emphasize the importance of aligning green banking products with SME needs to enhance loyalty and support global sustainability goals, including the United Nations’ Sustainable Development Goals (SDGs).