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Are pollution control bonds the solution for energy firms under the magnifying glass?

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Abstract

This study examines the effect of pollution control bonds on energy firms’ financial and environmental performance. A linear regression method was used for a sample of 221 U.S. energy firms observed from 2011 to 2020. The results indicate significant positive relationships between pollution control bonds and firm performance. Our results are robust to crisis effect and to alternative measures of firm performance and pollution control bonds. This study investigates the impact of pollution control bonds (PCBs) on the financial performance and environmental innovation of energy utility firms. Using a linear regression method, we analyzed a sample of 221 U.S. energy utility firms spanning from 2011 to 2020. The findings reveal significant positive effects of PCB issuance on both firm performance and environmental innovation. These results remain robust when considering crisis effects and alternative measures of both firm performance and environmental innovation. Notably, while existing literature has explored the outcomes of green financing, the specific benefits of PCBs have not been previously examined. The outcomes of this study hold valuable insights for regulators, investors, and policymakers aiming to advance the use of PCBs.

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Fig. 1

Source: Climate bonds initiative

Fig. 2

Source: Climate bonds initiative

Fig. 3

Source: Climate bond initiative

Fig. 4

Source: Climate bond initiative

Fig. 5

Source: Climate bond initiative

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Acknowledgements

The authors are grateful to the anonymous referees of the journal for their extremely useful suggestions to improve the quality of the article. Usual disclaimers apply.

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The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article.

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Authors and Affiliations

  1. Higher School of Business, Manouba University, Manouba, Tunisia

    Ines Bargaoui, Imen Khanchel & Naima Lassoued

  2. LARIME LR11ES02, ESSECT, University of Tunis, Tunis, Tunisia

    Imen Khanchel

  3. QUARG UR17ES26, ESCT, Manouba University, Manouba, Tunisia

    Naima Lassoued

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  1. Ines Bargaoui
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Contributions

IB contributed to data curation and writing. IK contributed to conceptualization, theoretical background, and editing. NL contributed to conceptualization, empirical design, and writing.

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Correspondence to Naima Lassoued.

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Bargaoui, I., Khanchel, I. & Lassoued, N. Are pollution control bonds the solution for energy firms under the magnifying glass?. Environ Dev Sustain (2024). https://doi.org/10.1007/s10668-023-04441-0

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