Impact of green bond policies on insurers: evidence from the european equity market

• Author: Petr Jakubik - Sibel Uguz
• Profession: European Insurance and Occupational Pensions Authority (EIOPA)
• Pages: 66-75

IMPACT OF GREEN BOND

POLICIES ON INSURERS:

EVIDENCE FROM THE EUROPEAN

EQUITY MARKET

Petr Jakubik and Sibel Uguz

ABST RAC T

This article empirically investigates whether the introduction of green bond policies by

insurance companies have apositive impact on their equity prices. To this aim, the sam-

ple of listed (re)insurers in Europe using monthly data for years 2012– 2019 is employed.

Announcements, press releases and semi-annual or annual reports are used to determine

when the insurance companies committed to agreen investment, issuance of green bonds

or launching agreen fund. Our results suggest that market investors positively price intro-

ducing such apolicies for the issuance of green bonds or launching agreen fund. However,

the same results were not conf‌irmed for initial investments in green bonds.

1. INTRODUCTION

Gs are f‌ixed-income instruments t hat f‌inance green p rojects with an envi-

ronmental obje ctive. In the past decade, green bonds have gained increasing at tention

as at ool to accele rate the support for climate-related investments and the transitio n

into an energ y-ecient societ y by channelling capital f‌lows towards mo re sustainable

f‌inance. The tr ansition into a greener e conomy concerns - by def‌inition– p resent and

future gener ations and hence poses an inter generational issue (Sachs, 2014). Historically,

debt f‌inancing has be en eective in realizing large scale and long-term pr ojects (e.g.

infrastructure). G reen bonds se rve as asuitable vehicle in spreading the costs of climate

changes whereas be nef‌its of alow carbon economy are generated in long-term.

The numerous inte rnational actions to ref‌lec t on climate change re lated impact have

led to an increased demand fo r socially and environmentally r esponsible investment in-

struments. By issuing green bonds corporations and government institut ions are able to

support environmental proje cts that help t he transition into am ore energy-sustainable

future. The green bond can be regard ed as apromise between it s issuer and th e investor.

Like anor mal bond , the investor provides funds for along-term with the issuer pr om-

42 European Insurance and Occupatio nal Pensions Author ity (EIOPA).

AN INSURANCE AND OCCUPATIONAL PENSIONS AUTHORITY

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