Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272271 
Year of Publication: 
2023
Series/Report no.: 
CFS Working Paper Series No. 712
Publisher: 
Goethe University Frankfurt, Center for Financial Studies (CFS), Frankfurt a. M.
Abstract: 
In order to reach climate neutrality by 2050, the European Union is taking action in the form of extensive sustainability regulations with the aim to push the private sector towards sustainable economic activities. In this context, a new instrument to finance a company's sustainability transition has been developed: the sustainability-linked bond (SLB). This paper analyzes the SLB market's efficiency in attracting those companies that are most crucial for a successful sustainability transition, namely carbon-intensive companies and companies that are lagging behind in their sustainability transition, defined as ESG laggards. By developing a conceptual framework for the SLB market and running a probit and logit regression estimation, this paper shows that the SLB market efficiently attracts carbon-intensive companies, but fails to attract ESG laggards. Moreover, the paper identifies four success factors for the SLB market to improve its future accessibility and credibility.
Subjects: 
Sustainable Finance
Sustainability-Linked Bonds
Transition Financing
Sustainable Investing
ESG
Market Efficiency
JEL: 
C25
G10
G14
G18
G38
Q01
Q58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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