Work

The impact of ESG preferences on stock borrowing volumes and fees*

Year: 2025

Type: article

Abstract: Capital market models propose a green premium in expected stock returns due to differing ESG preferences. Green investors favor green stocks, causing a scarcity raising borrowing volumes and fees. Using U.S. stock lending data, we find both green and brown stocks show higher borrowing volumes than neutral ones. However, only green stocks exhibit slightly higher fees, indicating limited supply driven by ESG preferences. Brown stocks show no such constraint. Though statistically significant, the fee premium for green stocks is economically minor – below one basis point – possibly due to weak ESG preferences or green investors neglecting the premium lost when lending.

Source: Finance research letters

DOI: 10.1016/j.frl.2025.108167

Authors: Maximilian Görgen, Stefan Jacob, Martin Rohleder, Marco Wilkens

Institutions: University of Augsburg, Utrecht University

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,730

Funder: Stiftung Mercator