Eureka! The elusive ‘greenium’ has been found

A review of green bond issues reveals a startling new statistic.

Published February 2, 2023, 7:00am ET · 1 min read

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(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — There may be a “greenium” after all. And that’s good news for investors who hope that they can influence companies to become more climate friendly.

I’m referring to the price premium that so-called “green” bonds are supposed to trade over “non-green” bonds. Their higher price would mean that their yields are lower, giving green firms an incentive to undertake climate-change-mitigation and other environmentally-friendly projects that would otherwise not be profitable.

As I’ve written before, previous research has failed to find evidence of a significant greenium. This in turn suggested that green bonds are having no real-world effect, and their issuance is an exercise in little more than greenwashing.

A new study finds that this conclusion may be wrong, however. It turns out that a green firm reduces its cost of capital only after issuing multiple green bonds over time…

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Trey Thoelcke

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.
Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community.
Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.
Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, moderating workshop sessions at regional conventions.

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