Finsif on tukenut vuosittain vastuullisen sijoittamisen tutkimusta stipendein
Finsif on jakanut stipendejä vastuullisesta sijoittamisesta kiinnostuneille opiskelijoille ja tutkijoille. Stipendien jaon tarkoituksena on ollut edistää vastuullisen sijoittamisen tutkimustyötä.
Investor demand for sustainable investments and financial instruments has grown rapidly in recent years and green bonds have become a key tool in this landscape, offering issuers an opportunity to signal their environmental commitment while funding green projects. Existing research shows that green bonds often carry lower yields at issuance and attract more positive market reactions than conventional bonds. At the same time, the market remains lightly regulated and largely based on voluntary standards, creating information asymmetry and increased risk of greenwashing. In response, third-party certification has emerged as an important mechanism for signalling a bond’s true environmental credibility.
A new granular look at green bond labelling
Our thesis examines how green bond labelling practices affect both green bond pricing at issuance and issuers’ environmental performance following the issuance. We utilize the CBI categorization of self-labelled, CBI-aligned and CBI-certified green bonds, as well as external reviews as an additional layer of green credibility. We expect them to have differing effects as certification and alignment represent more credible signals of environmental commitment, potentially valued by investors in a market with information asymmetry. Compared to previous literature, our approach is more granular, extending over different levels of green labels, both public and private issuers, and covering 65 countries and 16 currencies with a recent dataset of 6,643 corporate green bonds issued by early 2025.
More credible green signalling implies lower yield spreads
Our findings show that green bonds with more credible green signalling through CBI-alignment, and especially external reviews, are associated with lower yield spreads at issuance relative to self-labelled bonds or bonds without such review. However, the pricing premium is driven primarily by first-time issuances highlighting the information and signalling value of green labels when entering the green bond market. When studying the joint effect of CBI-alignment and external review, the pricing benefit appears not fully additive but partially substitutive, indicating potential overlapping signals.
Environmental performance improves post-issuance regardless of green label
Additionally, our findings show that issuers generally improve their environmental pillar and emissions scores after issuing a green bond, regardless of the label. The issuers of CBI-aligned bonds seem to have higher scores compared to issuers of self-labelled bonds; however, their scores appear higher already before bond issuance and their incremental post-issuance improvement is insignificant or even negative. This suggests that the difference in environmental performance would rather be driven by pre-existing firm characteristics and endogenous selection of issuers as firms with already stronger environmental performance end up seeking a label for their green bonds.
Implications for the maturing market of green bonds
Overall, our results indicate that credible green signalling, especially through external reviews, can provide a pricing benefit particularly when entering the green bond market for the first time. Meanwhile, firms’ post-issuance environmental performance appears largely attributable to firm-level factors rather than specific green labels. Our findings are particularly relevant in the current maturing green bond market, characterized by increasing investor demand, light regulation and certification emerging as an important way for issuers to signal true environmental commitment. Finally, the results of this thesis highlight the importance of developing more unified and comparable green bond standards to help investors assess environmental credibility across issuances and support effective capital allocation toward genuinely sustainable practices.
Ida Pulkkinen, M.Sc. in Economics and Business Administration, Finance, Aalto University 2025
Lotta Viljakainen, M.Sc. in Economics and Business Administration, Finance, Aalto University 2025
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