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Financial markets have the potential to magnify the adverse impacts of carbon-intensive assets, mainly in the case of a swift and unforeseen shift toward a low-carbon economy. Given that green bonds are already in the process of standardization and actively support the funding of environmental goals, this paper aims to explore their relationship with the European banking system. To achieve this objective, we utilize a cross-quantilogram approach, analyzing daily data gathered from July 2014 to January 2021 and examining bi-directional dependence. Our unique contribution lies in revealing the relationships between the green bond index and the stock market dynamics of European banks compared to their relationships with conventional stock market indices, which is a novel endeavor to the best of our knowledge. The results are consistent with prior research findings regarding the relationships between the green bond index and various companies and financial assets. These results confirm that other financial instruments impact green bonds, whereas the influence exerted by green bonds on other assets is minimal. Additionally, our study provides evidence indicating that the COVID-19 pandemic has altered the connections between these financial assets. [ABSTRACT FROM AUTHOR]

Nowadays, European countries, while implementing the goals of sustainable development, are trying to be energy secure by reducing energy consumption and switching to renewable energy sources; the issue of green bonds is essential in the financing of these projects. This study aims to investigate the current situation and trends in green finance, identifies its problems and challenges, as well as determines the importance of green bonds in sustainability in general and renewable energy supply in particular. The authors conducted a bibliometric analysis of green finance and renewable energy, followed by an extensive literature review identifying the benefits and challenges of green bond investments, continued with an empirical study that included hypothesis testing and the creation and analysis of the EU countries clusters, which have not been sufficiently studied to date. A study examining trends in green finance, identifying its benefits and challenges, found that green bond investments have a positive impact on carbon reduction and renewable energy supply in the EU OECD countries, and cluster analysis of the European OECD countries indicated a positive relationship between economic performance and overall ESG risk. [ABSTRACT FROM AUTHOR]

As climate change impacts energy consumption, investments in clean energy are now associated with increased levels of risk and uncertainty. Consequently, the management of risk for clean energy investors has garnered significant academic attention. This study was designed to explore the risk transfers among clean energy markets, how they respond to market volatility, and how exceptional events impact the risk spillover. This was performed by examining the risk spillover of and asymmetric connectedness between clean energy markets, green bonds, and other financial markets in China, in line with the connectedness framework and minimum spanning tree technique. The findings revealed that clean energy markets exhibit heterogeneity in terms of the direction and magnitude of net risk spillover, the types of hedging assets involved, and their response to market volatility. Exceptional events, such as the Russian–Ukrainian conflict and COVID-19 pandemic, have an impact on the spillover relationships. During stable market conditions, green bonds experience fewer spillovers from clean energy markets, whereas, in times of volatility, gold markets are subjected to fewer spillovers. In the time domain, the overall long-term spillover is stronger compared to the short and medium terms. In the frequency domain, there is a significant risk of low-frequency transmission. These findings hold practical implications for energy investors in portfolio construction and for policymakers in pursuing sustainability objectives. [ABSTRACT FROM AUTHOR]

Green bonds have increasingly been utilized around the world as a source of financing for renewable energy development, designed with compliance requirements and measurable economic returns to investors, while mitigating climate change. However, the efficacy of green bond arranged in the emerging economies for financing renewable energy assets and how the underlying risks are managed have remained to be explored. The paper aims to examine the evolving green financial system sponsored by both public and private institutions in managing such risks within China's emerging economy. A case study of green financing for a bundle of wind power assets led by a state-owned enterprise (SOE) reveals an alternative approach by structuring public–private collaboration while stipulating market-based financial incentives to institutional stakeholders under a political economy. This institutional consortium is composed of a state development bank, a commercial bank, credit rating agencies, institutional and private investors, regional power purchasers, and carbon trading entities. Financial stakeholders' risk in such emerging sustainable investment is moderated by these participating institutions and structured "upsides" from carbon trading aligned with the framework of green finance and standards for green bond development. The results reveal the potentials of scaling up the development of renewable energy by adequately managing and sharing key risks, while allocating substantial funding into renewable energy projects under such a green financial system that is to be complementary with a scalable post COVID-19 economic recovery. [ABSTRACT FROM AUTHOR]

Many countries are pursuing energy security (ES) in their economies while implementing sustainable development goals (SDGs). Relevant policies may include: (1) access to efficient alternative and preferably renewable energy sources (RESs); and (2) reductions in conventionally obtained energy consumption. As the demand for energy is growing and alternative energy resources are expensive, new ways of financing projects to improve ES are of special interest, e.g., issuing green bonds. In such cases, the obtained funds are allocated to projects that can both improve ES and help to achieve SDGs. The aim of the study was to explore the dependences (in the sense of Granger causality) between the green bond (GB) market, different aspects of sustainable development, as measured by global indicators taken from a family of environmental NASDAQ OMX indices, and ES represented by crude oil prices. The methodology is based on the vector autoregression model. The findings reveal evidence of a short-term dependence between the GB market, ES and the multidimensional nature of sustainable development. [ABSTRACT FROM AUTHOR]

Green energy is a crucial component in addressing expanding energy demands and combating climate change, but the possible negative repercussions of these technologies are frequently disregarded. Green energy's deployment is tied to environmentally sustainable development goals (SDGs). It can only be achieved by scaling up the finance of investment that provides environmental benefits through new financial instruments and new policies, such as green banks, green bonds, community-based green funds, green central banking, etc. In an effort to address the issues with IPAT and ImPACT, this study employed the STIRPAT model approach, which is a proven framework for energy economics analysis. The author gathers yearly data spanning 2002–2018 for six ASEAN member countries with the aim of investigating the relationship between CO2 emissions, green finance, energy efficiency, and the green energy index (GEX). After preliminary tests, the study employed the Westerlund test and Johansen Fisher test for long-term equilibrium and estimated the Granger causal links between variables using the generalized method of moments (GMM). The results indicate that green bonds are an effective technique for promoting green energy projects and considerably reducing CO2 emissions. Therefore, governments should establish supporting policies with a long-term perspective to increase the investment of green energy projects related investment from private participants to ensure sustainable growth and address environmental challenges. This strategy may be appropriate during and after the COVID-19 period. [ABSTRACT FROM AUTHOR]

Sustainability-Linked Bonds (SLBs) are a new type of general corporate purpose bond in which payments are tied to an issuer's sustainability key performance indicators (KPIs) with respect to the environmental, social, and governance (ESG) criteria. The structure is complementary to green bonds. The Tesco SLBs are linked to the firm's ability to cut its greenhouse gas emissions by 60%. The priority is to reduce its reliance on nonrenewable grid electricity, which contributed 65% of Tesco's global carbon emissions footprint. Tesco accounts for 1% of electricity demand in the UK. Failure to meet the goals will result in a coupon step-up by 25 basis points on the last three coupons. The aim of our study is to investigate the presence of, how we call it 'ESG spread', marked by negative yield difference between SLB and regular bonds. It is something similar to 'greenium', that is, a premium paid by bondholders for green bonds when compared to nongreen bonds. We compare the bid and ask yields of SLBs with the interpolated yields, calculated for the yields of Tesco and Carrefour notes. Then, we look into the SLB yields in coupon step-up scenario to answer the question if the issuer's failure to keep up with KPIs results in changing of ESG spread from negative to positive. [ABSTRACT FROM AUTHOR]