Work

Climate concerns, salient events, and green preferences

Year: 2025

Type: article

Abstract: This paper examines how climate concerns and climate-related events influence investor preferences for sustainable assets by analyzing the dynamics of greenium, defined as the yield discount on labeled green bonds under strict matching conditions. Using daily data from 2017 to 2023 for USD and Euro denominated bonds, and controlling for liquidity, yield curve slope, and volatility, we find that the greenium is modest on average. However, it responds significantly to shifts in climate-related attention and climate events. The latter effect is found only in European markets. Decomposing climate concerns variations into positive and negative components reveals a reversible response, raising concerns about the stability of green preferences as a long-term funding channel.

Source: Economics Letters

DOI: 10.1016/j.econlet.2025.112534

Authors: Maxime Merli, Joël Petey, Tristan Roger

Institutions: EM Strasbourg Business School, Université de Strasbourg, Centre Européen de Recherche en Economie Financière et Gestion des Entreprises, ICN Business School Nancy-Paris-Berlin, Université de Lorraine

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: hybrid

Estimated APC paid: $3,030