YIELD DISCREPANCIES IN GERMANY’S FIXED INCOME MARKET: SEARCHING FOR THE GREENIUM
Gunter, Cade
Gunter, Cade
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2025-05-19
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Global warming, climate shift, climate crisis, and increasing greenhouse gases are all terms that are often used when addressing climate change. Some of these terms represent causes while others convey the results. Climate change is a multifaceted, global issue with increasing demand for attention, and as this demand grows, so does the attention to ways of financing mechanisms that combat the issue. This paper will focus on that specific facet of climate change, addressing the role that green bonds play in financing mitigation efforts. The existence of what is known as the greenium has not been long debated because green bonds have not been circulating financial markets for more than two decades. The greenium refers to the alleged premium that investors are willing to pay on bonds that are labeled as green. This paper looks to Germany's fixed income market as a sample to find the existence of this greenium. Findings suggest that a measurable premium on green bonds does exist in the constrained context analyzed, offering insights to investor behavior and the potential use of green bonds as a financial tool for climate action.
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Finance