Greenwashing Risks in the Corporate Green Bond Markets: An Expenditure-based PDF & Additional Materials Measurement
HKUST IEMS Thought Leadership Brief No. 109
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The corporate green bond market has expanded rapidly, from USD 1 billion in 2012 to over USD 1.8 trillion in 2023, growing from below 0.01% to almost 5% of the global corporate bond market. Green bonds theoretically reduce greenhouse gas (GHG) emissions by channeling resources into environmental initiatives. Across 112 global issuers, we find that a 1% rise in environmental expenditure leads to a 1.5 percentage-point reduction in year-on-year GHG intensity growth. Similarly, a 1% increase in green bond outstanding corresponds to a 0.33% increase in environmental expenditure, indicating that larger issuance tends to yield greater investment in decarbonization.
The Traditional Chinese version is available here.
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About the author
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.
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