Advancing Energy Efficiency through Green Bond Policies

39 Pages Posted: 1 Jun 2021

See all articles by Avis Devine

Avis Devine

York University - Schulich School of Business

Meagan McCollum

University of Tulsa - Collins College of Business

Date Written: March 18, 2021

Abstract

Diffusion of new technology, such as green bond policies, is impacted by inefficiencies and frictions as the market navigates adoption. Using data from Fannie Mae multifamily green mortgage backed security issuances, we identify possible disconnects between pricing and benefits, as well as adoption trends. Evidence indicates that loans on properties backed by green bonds receive lower interest rates, lower debt service coverage ratios, and higher leverage ratios than their “brown” counterparts. Some of these findings represent stated program benefits, but others do not. Additionally, some benefits are observed accruing to properties which are not participating in a green MBS program, despite already qualifying for participation. Supporting evidence points to drivers of adoption and program refinements which could aid in policy maximization. Our results carry implications for both existing green bond programs as well as the diffusion of green bond policy into the broader capital markets.

Keywords: MBS, green bond, multifamily, issuance, energy efficiency, water efficiency

Suggested Citation

Devine, Avis and McCollum, Meagan, Advancing Energy Efficiency through Green Bond Policies (March 18, 2021). Available at SSRN: https://ssrn.com/abstract=3856312 or http://dx.doi.org/10.2139/ssrn.3856312

Avis Devine

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://schulich.yorku.ca/faculty/avis-devine/

Meagan McCollum (Contact Author)

University of Tulsa - Collins College of Business ( email )

600 South College
Tulsa, OK 74104
United States

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