Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311156 
Year of Publication: 
2024
Series/Report no.: 
ECB Working Paper No. 2990
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Firms' perceived cost of green capital has decreased since the rise of sustainable investing. Green and brown firms perceived their cost of capital to be the same before 2016, but after the post-2016 surge in sustainable investing, green firms perceived their cost of capital to be on average 1 percentage point lower. This difference has widened as sustainable investing has intensified. Within some of the largest energy and utility firms, managers have started applying a lower cost of capital to greener divisions. The changes in the perceived cost of green capital incentivize cross-firm and within-firm reallocation of capital toward greener investments.
Subjects: 
Cost of capital
discount rates
sustainable investing
ESG
JEL: 
G10
G12
G31
G32
G41
Q54
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-6880-5
Document Type: 
Working Paper

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