Do the Shades of Green Matter? The Pricing and Ownership of 'Darkgreen' Bonds

With the growth of green bonds as an asset class, the certification of the climate footprint of projects financed via those bonds is becoming more sophisticated. We investigate the pricing of the bonds with the highest climate impact rating, namely the “dark-green” bonds. We find that on average dark-green bonds are not priced differently from otherwise similar non-green or light-green bonds. However, we show that the ownership of dark-green bonds significantly differs from that of other bonds. Institutional investors committed to integrate sustainability in their investments have significantly higher stakes in dark-green bonds. While markets do not seem to price dark-green bonds differently from conventional bonds, they are able to importantly attract climate aware investors.