Pricing climate-related risks in the bond market

Agliardi, Elettra; Agliardi, Rossella

doi:10.1016/j.jfs.2021.100868

Cited by 48 publications

(19 citation statements)

References 32 publications

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“…The sheer magnitude of achieving the SDGs requires a considerable amount of capital investments (Fatica et al, 2021). In view of this, several central banks and other financial regulators have recommended banks to assess their contribution to environmental and climate‐related risks (Agliardi & Agliardi, 2021; Lamperti et al, 2021; Monasterolo et al, 2021). In particular, environmentally responsible behaviors such as green technologies, green products, green finance, and green strategies are increasingly being requested by firms' stakeholders (Atif et al, 2020; Basse Mama & Mandaroux, 2021; Chithambo et al, 2021; Dögl & Behnam, 2015; Gerged et al, 2021; Lu & Herremans, 2019; Park, 2018; Singh et al, 2021; Zameer et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

Executive compensation, environmental performance, and sustainable banking: The moderating effect of governance mechanisms

2022

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This paper contributes to the extant business strategy and sustainable development literature by investigating the effect of a broad corporate governance disclosure index on executive compensation and, subsequently, determines the extent to which the pay‐for‐sustainability sensitivity is moderated by corporate governance mechanisms. Employing data collected from 16 Sub‐Saharan Africa countries over the period from 2007 to 2018, the findings are as follows: First, we report that better‐governed banks pay lower compensation packages to their executives. Second, we find that executive compensation increases sustainable banking disclosures in the countries. Third, the findings show that executive compensation is negatively associated with environmental performance. Finally, we detect that the association between executive pay and sustainable banking performance is significantly moderated by corporate governance mechanisms, revealing that the pay‐for‐sustainability sensitivity is mainly positive and improves in banks with high corporate governance quality. This implies that the pay‐for‐sustainability sensitivity is contingent on the quality of the bank's internal governance mechanisms. Our findings have key implications for banking practitioners, regulators, environmental activists, and policy‐makers.

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Section: Introductionmentioning

confidence: 99%

Executive compensation, environmental performance, and sustainable banking: The moderating effect of governance mechanisms

2022

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“…Paranque & Revelli ( 2019 ) analyze the ethical value of issuing GBs through qualitative research on their social impacts. Under a transparent green financial regulatory regime, GBs are an effective intermediary for companies to exchange financing for social development (Paranque & Revelli, 2019 ) and financial benefits (Tang & Zhang, 2020 ; Flammer, 2018 ; Agliardi & Agliardi, 2021 ). For companies, the issuance of GBs positively impacts their credit quality (Agliardi & Agliardi, 2021 ) and CSR scores (Zhou & Cui, 2019 ).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Under a transparent green financial regulatory regime, GBs are an effective intermediary for companies to exchange financing for social development (Paranque & Revelli, 2019 ) and financial benefits (Tang & Zhang, 2020 ; Flammer, 2018 ; Agliardi & Agliardi, 2021 ). For companies, the issuance of GBs positively impacts their credit quality (Agliardi & Agliardi, 2021 ) and CSR scores (Zhou & Cui, 2019 ). Regarding institutional investors, survey evidence from Krueger et al, ( 2020 ) shows that they consider the climate risk and prefer investment in environmental, social, and governance (ESG) oriented assets and that investors’ sentiments affect GB returns and volatility (Pham & Huynh, 2020 ; Pineiro-Chousa et al, 2021 ).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Academic research about it, therefore, is limited. Most scholars have focused on testing the pricing model of GBs (Hyun et al, 2021 ; Agliardi & Agliardi, 2021 ), the hedging effect of GBs compared to other assets (Jin et al, 2020), the link between GBs and other financial assets (Reboredo, 2018 ; Nguyen et al, 2021 ), and investors’ perception of “green” (Zerbib, 2019 ; Sangiorgi & Schopohl, 2021 ). Considerable research has been undertaken in management and finance to examine the global relationship between CSR and corporate performance.…”

Section: Introductionmentioning

confidence: 99%

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The Stock Performance of Green Bond Issuers During COVID-19 Pandemic: The Case of China

Jin

Zhang

2022

Asia-Pac Financ Markets

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The green bond (GB) is a new financial product in the green finance field that has recently become a corporate social responsibility (CSR) tool for organizations. Previous studies show that high-CSR firms receive more trust from shareholders during a financial crisis. This paper aims to assess the stock performance of publicly listed Chinese companies that issued GBs during the COVID-19 pandemic. The bond sample covers 2016–2019 and consists of 67 listed issuers. The paper uses the event study method based on the market and Fama-French (1993) three-factor models. Our results show that GB issuers exhibited significantly positive cumulative abnormal stock returns on the official announcement dates of the COVID-19 outbreak. The positive cumulative abnormal returns are mainly driven by non-financial GB issuers rather than financial GB issuers. The results reflect the attitudes of investors toward GB-issuing companies primarily in the context of the crisis and contribute to the development of green finance policies.

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“…In order to make green bonds more attractive, policymakers should take measures to scale up the green bond markets, for example, favourable tax rates for green bondholders (Agliardi and Agliardi, 2021). As there exist feedback effects between green bonds and investor attention, a policy that informs investors about green bonds can influence incentives to invest in this market (Pham and Huynh, 2020).…”

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confidence: 99%

Role of Green Finance in Greening the Economy: Conceptual Approach

Aleknevičienė¹,

Bendoraitytė²

2023

CEBR

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Currently, the economic development of countries and regions is not possible without the implementation of the European Green Deal. A set of policy initiatives by the European Commission is closely related to such concepts as greening the economy, green finance, climate finance, climate change adaptation and mitigation, environmental protection, and others. This research is dedicated to highlighting the role of green finance in the environmental protection and development of the financial sector. Green finance connects the worlds of finance and business with environmentally friendly behaviour. In principle, all strategic decisions made by business organisations must take into account the potential impact on the environment, which means that value creation in the long term is integral to the well-being of current and future generations. The novelty of the research lies in the developed conceptual framework of the role of green finance in greening the economy. The conceptual framework covers three main elements of the green economy: the real green economy, green finance, and providers of green financethe green financial sector and public funds. It is developed by applying the methods of content analysis and synthesis, comparison and logical modelling, model as a research design proposed by Jaakkola (2020), system test proposed by Arnold and Wade (2015) and the main features of the conceptual framework presented by Jabareen (2009). Implications for the Central European audience: The main "green" economic and financial concepts are described, and their interconnectedness is revealed in this study. This is important in the stage of greening the economy when various actorsusers of information and decision-makersinterpret the concepts differently. Different understanding and thinking slow down the development of the green economy. The developed conceptual framework provides a clear understanding of how business and public organisations, as well as individuals, can change their behaviour into environmentally friendly by investing in real investment projects or financial assets. Finally, the main research challenges and directions related to green real and financial investments are revealed.

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Pricing climate-related risks in the bond market

Cited by 48 publications

References 32 publications

Executive compensation, environmental performance, and sustainable banking: The moderating effect of governance mechanisms

Executive compensation, environmental performance, and sustainable banking: The moderating effect of governance mechanisms

The Stock Performance of Green Bond Issuers During COVID-19 Pandemic: The Case of China

Role of Green Finance in Greening the Economy: Conceptual Approach

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