Are green bonds funding the transition? Investigating the link between companies’ climate targets and green debt financing.
A new study by the Stockholm Environment Institute (SEI) and the Stockholm Sustainable Finance Centre (SSFC), investigates the question of whether green bond issuers are using green debt to manage their transition risk. Researchers asked the question what kind of climate targets have been adopted by green bond issuers, to what extent are green bond frameworks connected with issuers climate targets, and to what extent does green bond reporting enable transparent and comparative assessment of issuers’ progress on climate targets.
The study found that out of the twenty issuers, only eleven had set climate targets beyond 2025 and six had not set any absolute emission reduction targets. The lack of long-term mitigation targets and in some cases absolute targets suggests that green bond issuance on its own is not indicative of issuers having an ambitious strategy to lowering emissions and managing transition risks.
Heidi Tuhkanen & Gregor Vulturius (2020): Are green bonds funding the transition? Investigating the link between companies’ climate targets and green debt financing, Journal of Sustainable Finance & Investment, DOI: 10.1080/20430795.2020.1857634