(Finance) – The European Securities and Markets Authority (ESMA) “cannot confirm a systematic price advantage” for the ESG bondsaccording to a report taking into account data up to March 2023. However, ESG bond issuers have “benefited in the past from statistically significant pricing driven by their ESG credentials at the issuer level,” a report analyzing the There is an ESG effect on prices (the “Greenium”) between different types of securities labeled as “sustainable”.
Greenium is theextra yield that investors give to companies that issue a green bond compared to the yield of a conventional bond with the same maturity
The Authority explains that the issue of “sustainable-labelled” debt is increased rapidly in recent years (+28% in one year in 1H23 and +663% since 1H18), and the variety of debt instruments with a sustainability aspect introduced to the market has increased.
Existing research suggests that issuers of sustainable-labelled debt could benefit from a pricing advantage, often nicknamed Greenium, but “however, the evidence is not conclusive and they concentrate largely only on green bonds“, writes ESMA.
The evaluation was conducted for a total dataset of 8,696 bonds of issuers domiciled in the EEA, with a combined outstanding nominal value of €3.7 trillion.
As the sustainable debt market continues to constantly evolve, and considering that this analysis examines a specific sample of outstanding bonds, these findings “they should not be interpreted as a general rejection regarding the possibility of price advantages linked to sustainable debt instruments”, is underlined.