Exploring the determinants of corporate green bond issuance and its environmental implication: the role of corporate board

Abstract

The exponential growth of the green bond market has generated an incipient debate in the literature about the causes and implications for companies employing this green financing. An unexplored issue is the role of the board. In this context, the aim of this research is two-fold. Firstly, we analyse whether companies that have issued green bonds during the 2013–2021 period are characterised over the previous two years by having certain corporate governance characteristics, such as having a sustainability committee or a board with a higher percentage of women. Secondly, we examine whether these companies improve their environmental performance post-issuance by considering these governance characteristics, as well as the certification of green bonds and the purpose of the funds. For this purpose, we employ up to five alternative environmental performance variables. Our overall results indicate that companies that issue green bonds have a higher environmental score, a lower volume of CO2 emissions, a board with a higher percentage of women and a sustainability committee. Moreover, such companies continue to perform certain environmentally friendly actions in the years after issuance. Furthermore, the results reflect that companies with poorer environmental scores may be using external certification of their emissions to improve their image.