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Hinsche, I., Klump, R. The Efficiency of the Sustainability-Linked Bond Market for a Successful Sustainability Transition. Vierteljahrshefte zur Wirtschaftsforschung, 92(3), 91-112. https://doi.org/10.3790/vjh.92.3.91
Hinsche, Isabelle Cathérine and Klump, Rainer "The Efficiency of the Sustainability-Linked Bond Market for a Successful Sustainability Transition" Vierteljahrshefte zur Wirtschaftsforschung 92.3, 2023, 91-112. https://doi.org/10.3790/vjh.92.3.91
Hinsche, Isabelle Cathérine/Klump, Rainer (2023): The Efficiency of the Sustainability-Linked Bond Market for a Successful Sustainability Transition, in: Vierteljahrshefte zur Wirtschaftsforschung, vol. 92, iss. 3, 91-112, [online] https://doi.org/10.3790/vjh.92.3.91
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The Efficiency of the Sustainability-Linked Bond Market for a Successful Sustainability Transition

Hinsche, Isabelle Cathérine | Klump, Rainer

Vierteljahrshefte zur Wirtschaftsforschung, Vol. 92 (2023), Iss. 3 : pp. 91–112

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Article Details

Publisher Name
Duncker & Humblot
DOI
https://doi.org/10.3790/vjh.92.3.91
Language
English
Pages
22
Keywords

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Author Details

Isabelle Cathérine Hinsche, Department of Economy Policy & Quantitative Methods, Goethe University, Frankfurt

  • Isabelle Catherine Hinsche ist Doktorandin der Volkswirtschaftslehre an der Goethe Universität Frankfurt zum Thema Sustainable Finance. Sie hat Wirtschaftswissenschaften an der Universität Maastricht, der Fairfield University, der Goethe Universität und der Erasmus Universität Rotterdam studiert. Ihre Forschung befasst sich mit Sustainable Finance, insbesondere mit den der Markt- und Preismechanismen im Sustainable Finance Markt und dem Zusammenwirken von privaten Investitionen und staatlichen Regulierungen.
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Rainer Klump, Center for Financial Studies and Department of Economy Policy & Quantitative Methods, Goethe University, Frankfurt

  • Rainer Klump ist Professor für Volkswirtschaftslehre, insb. Wirtschaftspolitik an der Goethe-Universität Frankfurt am Main sowie Geschäftsführender Direktor des dortigen House of Finance. Er hat an den Universitäten Mainz, Paris I und Erlangen-Nürnberg studiert und promoviert und hatte Professuren an den Universitäten Würzburg und Ulm inne, bevor er nach Frankfurt wechselte. Seine Forschung befasst sich schwerpunktmäßig mit Wachstum, Entwicklung, Innovationen und Transformationsprozessen.
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Abstract

Summary: In order to reach climate neutrality by 2050, the European Union is taking action in the form of extensive sustainability regulations with the aim to push the private sector towards sustainable economic activities. In this context, a new instrument to finance a company’s sustainability transition has been developed: the sustainability-linked bond (SLB). This paper analyzes the SLB market’s efficiency in attracting those companies that are most crucial for a successful sustainability transition, namely carbon-intensive companies and companies that are lagging behind in their sustainability transition, defined as ESG laggards. By developing a conceptual framework for the SLB market and running a probit and logit regression estimation, this paper shows that the SLB market efficiently attracts carbon-intensive companies, but fails to attract ESG laggards. Moreover, the paper identifies four success factors for the SLB market to improve its future accessibility and credibility.

Table of Contents

Section Title Page Action Price
Isabelle Cathérine Hinsche und Rainer Klump:\nThe Efficiency of the Sustainability-Linked Bond Market for a Successful Sustainability Transition 91
1 Introduction 92
2 Literature Review 93
2.1 The European Green Deal Investment Plan 93
2.2 Transition Financing 94
2.3 Sustainability-Linked Bonds 95
2.4 Sustainability-Linked Bond Market 95
2.5 Risks and Challenges for Sustainability-Linked Bonds 96
3 Conceptual Framework 97
3.1 Sustainability Transformation Target Groups 98
3.2 Market Characteristics 99
3.3 Company Characteristics 99
3.4 Financial Characteristics 100
4 Methodology 100
4.1 Probit Choice Model 100
4.2 Data and Sample Selection 100
4.3 Data Summary 101
4.4 Empirical Methodology 101
5 Results 104
5.1 SLB Market Attracts Carbon-Intensive Industries – But Not ESG Laggards 104
5.2 Influential Market, Company and Financial Characteristics 106
6 Discussion and Conclusions 109
Literature 111

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