How and to what extent green bonds are a key component of the fight against climate change?
Trochon, François (2019)
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In this paper, we examine the green financial product name green bonds, by answering the question “How and to what extent green bonds are a key component in the fight against climate change?” The green bond market has seen exponential growth past years and continue its development, thanks to the increase of awareness of investors towards ecological issues. After explaining features of green bonds and its market, this research shows the differences of the product compared to other kind of green investments. Green bonds returns are less impacted by the financials ups and downs because it is a low-risk investment, which also means that the return is often lower when the market is in good health. Green bonds studies show different results for the same sample period, which demonstrate that this market need more time and data to get high-quality analysis. However, the results indicate that we have reason to believe green bonds do not outperform compared to conventional bonds. It exists a wide range of ways to promote green bonds in order to make it continue its growth, like pressuring companies, avoiding taxes, increasing investors reliance and communicating about the product. Green bonds thus represent an efficient way to both make an efficient investment and participate in the funding of green projects.