Does it pay to go green? The impact of green bond issuance on corporate performance

Abstract

Using a sample of 145 first-time green bond issuers and 2,225 non-issuers in 10 countries/regions from 2014 to 2019, we conduct a Propensity Score Matching-Difference-in-Difference analysis to examine the impact of green bond issuance on firms' long-term environmental and financial performance by comparing the changes after green bond issuance between issuers and a paired control group. We find a significant improvement in financial performance two years after green bond issuance but no significant changes in environmental performance. The changes in performance vary for issuers in different sectors and countries. Only issuers in the industrial and energy sectors experience real benefits after issuing green bonds. Furthermore, there is a lag of about two years in improving corporate performance. Overall, the impact of green bond issuance on corporate financial and environmental performance varies across regions and sectors.