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

AuthorPetr Jakubik - Sibel Uguz
ProfessionEuropean Insurance and Occupational Pensions Authority (EIOPA)
Pages66-75
IMPACT OF GREEN BOND
POLICIES ON INSURERS:
EVIDENCE FROM THE EUROPEAN
EQUITY MARKET
Petr Jakubik and Sibel Uguz
ABSTRACT
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 that f‌inance green projects with an envi-
ronmental obje ctive. In the past decade, green bonds have gained increasing at tention
as atool to accelerate the support for climate-related investments and the transition
into an energy-ecient societ y by channelling capital f‌lows towards mo re sustainable
f‌inance. The transition into agreener economy concerns - by def‌inition– present and
future gener ations and hence poses an inter generational issue (Sachs, 2014). Historically,
debt f‌inancing has been eective in realizing large scale and long-term projects (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 international actions to ref‌lect on climate change related 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-
42European Insurance and Occupatio nal Pensions Author ity (EIOPA).
AN INSURANCE AND OCCUPATIONAL PENSIONS AUTHORITY
66

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