The Effects of ESG Performance and Sustainability Disclosure on Gss [1] Bonds’ Yields and Spreads: A Global Analysis [1] Green, Social, Sustainable

Abstract

Considering a sample of 3,960 GSS bonds, this study investigates the effects of the issuer’s ESG performance on both the issue-specific yield and its spread vis-à-vis a sovereign comparable. The findings highlight that a greater commitment to the sustainable transition is a winning strategy, for a company, to reduce the cost of debt for future projects. While the risk-reducing power of ESG performance does not appear to differ based on a divide between advanced economies and emerging markets, we find that the real enabler of curbing the unexplained portion of risk is a detailed disclosure on the use of proceeds.

Keywords: GSS bonds, debt capital markets, ESG, sustainability, yield spread, credit rating