Financing the Response to Climate Change: The Pricing and Ownership of U.S. Green Bonds

45 Pages Posted: 13 Nov 2018

See all articles by Malcolm P. Baker

Malcolm P. Baker

Harvard Business School; National Bureau of Economic Research (NBER)

Daniel Bergstresser

Brandeis International Business School

George Serafeim

Harvard University - Harvard Business School

Jeffrey Wurgler

NYU Stern School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: October 12, 2018

Abstract

We study green bonds, which are bonds whose proceeds are used for environmentally sensitive purposes. After an overview of the U.S. corporate and municipal green bonds markets, we study pricing and ownership patterns using a simple framework that incorporates assets with nonpecuniary utility. As predicted, we find that green municipal bonds are issued at a premium to otherwise similar ordinary bonds. We also confirm that green bonds, particularly small or essentially riskless ones, are more closely held than ordinary bonds. These pricing and ownership effects are strongest for bonds that are externally certified as green.

Keywords: Municipal Bonds, Green Bonds, Climate Finance

JEL Classification: G1, G12

Suggested Citation

Baker, Malcolm P. and Bergstresser, Daniel B. and Serafeim, George and Wurgler, Jeffrey A., Financing the Response to Climate Change: The Pricing and Ownership of U.S. Green Bonds (October 12, 2018). Available at SSRN: https://ssrn.com/abstract=3275327 or http://dx.doi.org/10.2139/ssrn.3275327

Malcolm P. Baker (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States
617-495-6566 (Phone)

HOME PAGE: http://www.people.hbs.edu/mbaker

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Daniel B. Bergstresser

Brandeis International Business School ( email )

Waltham, MA 02454
United States
6174162324 (Phone)

George Serafeim

Harvard University - Harvard Business School ( email )

381 Morgan Hall
Boston, MA 02163
United States

HOME PAGE: http://goo.gl/q4cJ5A

Jeffrey A. Wurgler

NYU Stern School of Business ( email )

Stern School of Business
44 West 4th Street, Suite 9-190
New York, NY 10012-1126
United States
212-998-0367 (Phone)
212-995-4233 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~jwurgler/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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