The pricing of green bonds: external reviews and the shades of green

Abstract We investigate the asset pricing implications of greenness bonds. To estimate a green-pricing effect, we determine ‘green bond premium’ as difference between yields matched conventional and green-labeled On cross-sectional average, green bonds experience statistically significant positive premium. This premium increases with external evaluations, i.e., investors accept premiums up to 5 basis points for substantial environmental agenda. validation which is strongest that are rated dark-green, may offset not incurring information costs, this effect decreases increasing age