Library:
Paris Champerret
Madrid
London
Paris Montparnasse
Turin
- Item type
- Study and report
- Dissertation
- Language
- English
- Publication year
- 2024
- Contributors
- FOUQUAU, Julien
- Subjects
- FINANCES
The severe consequences of climate change, which include unprecedented wildfires, hurricanes, and heat waves, underscore the critical nature of addressing the global warming caused by human activities. As emphasised by the IPCC, the scientific community as a whole recognises the critical nature of reducing greenhouse gas (GHG) emissions as well as decreasing the dependency on fossil fuels. This situation highlights the critical difficulty of shifting towards a low-carbon, sustainable future, which requires substantial financial investments and industry-wide innovations.
In response to these environmental challenges, the concept of green finance has emerged, giving birth to financial instruments designed to support climate change mitigation efforts. Among these, green bonds stand out as a pivotal tool. They are specifically aimed at raising capital for projects with environmental benefits, aligning both the issuer’s capital needs and investors’ thirst for sustainable initiatives.
The objective of this dissertation is to investigate the concept of greenium, which refers to a potential yield discount that green bonds offer in comparison to conventional bonds, within the primary bond market. This study examines whether green bonds can offer issuers a more cost-effective financing alternative by attracting investors who are willing to accept lower returns in exchange for environmental benefits.
The analysis will be conducted through a comprehensive literature review and empirical research, constructing an updated dataset and samples to examine the existence and implications of the greenium. By focusing on corporate and FIG green bonds, this study seeks to examine the validity of prior assumptions or if new, novel factors contribute to the dynamics observed in the market. Ultimately, this research intends to provide insights into the cost implications for issuers as well as the broader significance of green bonds in financing the transition to a sustainable future.
