Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/238587 
Year of Publication: 
2021
Series/Report no.: 
ADBI Working Paper Series No. 1230
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
Recently, the concept of "blue finance" was introduced to the world. Blue finance envisages that ocean firms issue financial instruments to obtain funds and take necessary measures to make the ocean environment blue. To measure the blueness of a firm, we estimate the blueness index using GHG emissions as a percentage of sales. This study proposes a theoretical model to estimate the portfolio's utility function by incorporating the blueness factor. The result suggests a positive relationship between the blueness proxy and optimal investment allocation. In the absence of blueness, their returns would be taxed; thus, the participation of investment in blue bonds decreases. Last, we examine the factors that cause stock returns and document a positive association between the blueness of a firm and stock returns. This evidence indicates that firms that are relatively 'bluer' may be more perceptive of the public's preference for sustainable investments, thereby leading them to outperform
Subjects: 
ocean emissions
blueness index
bonds
portfolio allocation
emission tax
JEL: 
G11
G12
H21
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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