Rapid decarbonization needs massive capital for sustainable projects. But what truly unlocks green finance?
New research from CBS Professor Tanusree Jain and colleagues shows that board networks play a crucial role in unlocking green finance and accelerating the green transition.
Boards unlock green finance
A new study from CBS shows that boards play a decisive role in mobilising capital for the green transition.
Green bonds are a key instrument for funding sustainable projects. Yet for many companies, issuing them is not an obvious choice. They involve additional costs, less flexibility in how the capital can be used and only limited pricing advantages.
Research by Tanusree Jain, Professor at CBS, and her co-authors demonstrates that boards can help overcome these barriers. Companies whose directors are well connected to firms that have previously issued green bonds are significantly more likely to issue green bonds themselves.
The reason is not only financial. Director networks appear to reduce uncertainty by sharing credible insights about the outcomes of green bond issuance. At the same time, they reinforce reputational norms linked to environmental commitments.
The findings point to a broader insight: 𝘛𝘩𝘦 𝘨𝘳𝘦𝘦𝘯 𝘵𝘳𝘢𝘯𝘴𝘪𝘵𝘪𝘰𝘯 𝘪𝘴 𝘯𝘰𝘵 𝘥𝘳𝘪𝘷𝘦𝘯 𝘣𝘺 𝘱𝘳𝘪𝘤𝘦𝘴 𝘢𝘭𝘰𝘯𝘦. 𝘚𝘰𝘤𝘪𝘢𝘭 𝘤𝘢𝘱𝘪𝘵𝘢𝘭 𝘢𝘵 𝘵𝘩𝘦 𝘣𝘰𝘢𝘳𝘥 𝘭𝘦𝘷𝘦𝘭 𝘩𝘦𝘭𝘱𝘴 𝘮𝘰𝘣𝘪𝘭𝘪𝘻𝘦 𝘤𝘢𝘱𝘪𝘵𝘢𝘭 𝘵𝘰𝘸𝘢𝘳𝘥 𝘴𝘶𝘴𝘵𝘢𝘪𝘯𝘢𝘣𝘪𝘭𝘪𝘵𝘺 𝘢𝘵 𝘴𝘤𝘢𝘭𝘦.
Read the article here.