Greenwashing Risks in the Corporate Green Bond Markets: An Expenditure-Based Analysis
SHARE THIS
| Keith Jin Deng Chan, Wilson Tsz Shing Wan | |
| Monday 13 April 2026 at 2:00 - 3:30 pm (Hong Kong time, GMT +8) | |
|
Zoom (https://hkust.zoom.us/webinar/register/WN_YuqvXGK_QcuraJ-oX6tKKw) |
The green bond market has witnessed remarkable growth in recent years, channelling billions of capitals into climate finance. Yet, greenwashing risk—where issuers make unsubstantiated claims about their environmental commitments—remains a major challenge to market credibility and the allocative efficiency of climate capital. Traditional assessments based on outcome often fail to capture genuine greenhouse gas (GHG) abatement efforts, thereby undermining the additionality of climate finance. In response, this paper develops a novel expenditure-based greenwashing risk metric, calculated as the gap between expected and actual environmental expenditures for a global sample of green bond issuers committed to GHG abatement. The new metric shows that firm’s greenwashing risk is associated with slower GHG abatement. More important, it reveals a paradox in investor behavior: institutional investors sometimes increase holdings in high-risk issuers with low transition capacity, misdirecting climate finance. The analysis further reveals spillover effects, as constrained high-risk issuers shift from the bond market to green loans, transferring greenwashing risk to banks and raising financial stability concerns. These results highlight the urgent need for policies that drive low-carbon technology adoption and comprehensive climate risk management across lending portfolios, helping ensure that climate finance achieves its intended environmental objectives.
About the speaker
Keith Jin Deng Chan is an Assistant Professor in the Division of Environment and Sustainability at The Hong Kong University of Science and Technology (HKUST). He specializes in applying economic and game theory to study the optimal design of governance mechanisms. He is currently a member of China Technical Expert Group under the IPSF Taxonomy Working Group. His research has also informed the Hong Kong Monetary Authority in formulating the Hong Kong Taxonomy for Sustainable Finance. He holds a PhD in Economics from the University of Cambridge.
Wilson Tsz Shing Wan is a PhD candidate in the Division of Environment and Sustainability at HKUST. He specializes in applying empirical methods to study the financial instability implications of climate finance. His paper, The Economics of the Greenium: How Much is the World Willing to Pay to Save the Earth?, was awarded for outstanding publication in the Journal Environmental and Resource Economics in 2022. He is also currently working in the Banking Supervision Department of the Hong Kong Monetary Authority. He holds a MPhil in Economics from HKUST.
Registration
The seminar will be conducted through Zoom. Sign up here.
Get updates from HKUST IEMS
