ESG Blockholders and Corporate Green Bonds

Abstract

This study explores whether ESG blockholders (large shareholders with a focus on environmental, social, and governance issues) influence the issuance of corporate green bonds, which fund environmentally friendly projects. The findings show that ESG blockholders positively impact green bond issuance, benefiting shareholders by reducing external financing costs in the long term. Additionally, ESG blockholders modify the relationship between green bond issuance and debt financing costs, helping mitigate the limited long-term effects of green bonds on borrowing costs. After climate policy shocks, ESG blockholders emphasize green actions, driving more green bond issuances to manage environmental risks. This highlights the role of large investors in promoting green bond markets.