Corporate Green Bonds

54 Pages Posted: 27 Feb 2018 Last revised: 16 Apr 2020

See all articles by Caroline Flammer

Caroline Flammer

Columbia University; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Date Written: April 14, 2020


I examine corporate green bonds, whose proceeds finance climate-friendly projects. These bonds have become more prevalent over time, especially in industries where the environment is financially material to firm operations. I document that investors respond positively to the issuance announcement, a response that is stronger for first-time issuers and bonds certified by third parties. The issuers improve their environmental performance post issuance (i.e., higher environmental ratings and lower CO2 emissions), and experience an increase in ownership by long-term and green investors. Overall, the findings are consistent with a signaling argument—by issuing green bonds, companies credibly signal their commitment towards the environment.

Keywords: sustainable finance, climate change, green bonds, impact investing, corporate sustainability, environment

JEL Classification: G23, M14, D22, Q2, G14

Suggested Citation

Flammer, Caroline, Corporate Green Bonds (April 14, 2020). Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: or

Caroline Flammer (Contact Author)

Columbia University ( email )

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National Bureau of Economic Research (NBER) ( email )

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European Corporate Governance Institute (ECGI) ( email )

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