Does a Company’s Environmental Performance Influence Its Price of Debt Capital? Evidence from the Bond Market

Micol Alexandria Chiesa, Ben McEwen, Suborna Barua

2021 | Academic | Fixed Income, Risk & Performance

Environmental performance is negatively associated with the cost of debt, meaning that the lower the corporate environmental performance, the higher the cost of debt. The integration of environmental factors into investment processes and decision-making is apparent along each debt maturity. Assigning bonds specifically to green projects or activities by firms may not necessarily lower the cost of borrowing.