An Investment Strategy Based on Impact

An empirical analysis of corporate sustainability bonds

“…Increased investor awareness will make sustainability bonds a popular investment opportunity. This finding supports previous studies that examine investors who integrate ESG criteria into their investments (Juddoo et al, 2023;Mocanu et al, 2021;Starks et al, 2018). For firms, the findings of this study will inform them on how sustainability issuances would make the firms more appealing and attractive to ESG investors, thus enabling firms to expand their investor base.…”

“…3 Finally, this study provides evidence of the market reaction to sustainability bonds and compares the results to traditional bonds. This contributes to the growing literature on sustainable finance and impact investing (Baker et al, 2022;Cunha et al, 2021;Flammer, 2021;Hachenberg & Schiereck, 2018;Hong et al, 2020;Juddoo et al, 2023;Park, 2018;Secinaro et al, 2020;Yu et al, 2016).…”

“…Shareholders recognise and welcome firms' commitment towards the ESG agenda and regard it as value-enhancing. Furthermore, impact investors who value the ESG commitment of firms will be drawn towards instruments issued by firms that aim to enhance the ESG initiatives alongside offering a financial return (Barber et al, 2021;Juddoo et al, 2023).…”

“…However, little is known about the stock market reaction to sustainability bond announcements, whose proceeds are primarily used for environmental and social causes. Furthermore, most of the empirical research in the field of sustainable investing focuses on equities (Barber et al, 2021;Juddoo et al, 2023), green bonds (Flammer, 2021) and ethical fund performance (Madhavan & Sobczyk, 2020). Hence, this study attempts to fill the gap by analysing the performance of sustainability bonds.…”