Exploring the Relationship Between ESG Performance and Green Bond Issuance.

Area of Science:

• Finance
• Corporate Sustainability
• Emerging Markets

Background:

• Green bonds are increasingly vital financial instruments.
• Investor recognition of corporate sustainability is growing.
• ESG performance and green bond issuance are key areas of research.

Purpose of the Study:

• To examine the relationship between ESG performance and green bond issuance in Chinese listed firms.
• To assess how ESG dimensions influence green bond issuance.
• To understand investor recognition of sustainable activities via green bond issuance.

Main Methods:

• Utilized data from Wind and CSMAR databases for Chinese listed companies (2016-2020).
• Employed green bond issuance as a proxy for investor recognition of sustainable activities.
• Linked literature on ESG, financial performance, and green bond issuance.

Main Results:

• Positive correlation found between ESG practices and green bond issuance propensity and volume.
• All dimensions of ESG performance positively impact green bond issuance.
• A negative effect of financial performance on green bond issuance was identified when combined with ESG performance.

Conclusions:

• Strong ESG performance enhances green bond issuance for Chinese firms.
• ESG factors are critical drivers for accessing green finance in emerging markets.
• While ESG is beneficial, the interplay with financial performance requires further investigation.