Does Sustainable Investing Deprive Unsustainable Firms of Fresh Capital?

David Blitz, Laurens Swinkels, Jan Anton van Zanten

2021 | Practitioner | Cost of Capital, Impact Investing

Examining stock and bond issuance of listed firms, the authors find no evidence that fresh capital is flowing more to sustainable than to unsustainable firms. The sustainability profile of equity issuers is generally similar to the broad market, while debt issuers even tend to have a below-average sustainability profile. To date, unsustainable firms have not been deprived of fresh capital, although further mainstreaming of sustainable investing might change that in the future.