Do green bonds deliver? Environmental outcomes and greenwashing tests in Europe

Abstract

Green bonds are designed to finance sustainable projects, acting also as a signal of firms’ commitment to environmental goals. Using a panel of European-based firms over 2013–2024, we examine whether green bond issuance is followed by significant environmental improvements. Comparing corporate green bond issuers with a matched sample of conventional bond issuers, we find significantly better post-issuance environmental outcomes for green bond issuers across alternative proxies. Green bond issuance is positively associated with changes in green revenues, improvements in environmental related performance, as captured by our environmental rating measure, and disclosure of non-financial information. Additionally, we find a decline in climate risk following green bond issuance, driven by a reduction in CO₂ emissions. Overall, our results do not indicate patterns consistent with greenwashing, suggesting that corporate green bonds in Europe are associated with observable improvements in environmental-related outcomes.