Background: With increasing environmental concerns, green finance has emerged as a key driver for promoting corporate sustainable initiatives. Among these green financing options, green bonds have gained increased popularity. Given the expanding demand for green bonds compared to conventional bonds, a potential yield difference between these two financial instruments is argued, giving rise to the phenomenon known as the Greenium. Similarly, at the corporate level, firms experience a higher propensity to present themselves as environmentally friendly to capitalize on this sustainability preference. This can be achieved through the integration of ESG incentives into their operation. Purpose: This thesis aims to investigate whether a predictable probability exists between the Greenium and the incentives of U.S. Small Cap companies to adopt an initial ESG score. Such a relationship would imply that the Greenium could serve as a market indicator predicting corporations’ response to increasing sustainability demand. Method: To address the purpose, this thesis uses a quantitative strategy with a positivistic deductive approach and utilizes a panel data logit model with a binary dependent variable. The main data consists of the companies' reported financial performance for each firm-year until it receives the initial ESG score, collected for the period 2015 to 2023 for U.S. Small Cap firms. Conclusion: The findings advocate a positive effect of the Greenium, serving as a sustainability market indicator, on the probability of Small Cap U.S. firms adopting an initial ESG score; however, its effect is industry related. Certain industries are observed to demonstrate a greater response to increases in the Greenium, with the Consumer Cyclicals industry exhibiting the strongest relationship.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:hj-64516 |
| Date | January 2024 |
| Creators | Blennow, Martin, Carlqvist, Emma |
| Publisher | Jönköping University, IHH, Företagsekonomi |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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