Identifying factors affecting the preference for green bonds: A Japanese case study

Abstract

International green bond (GB) guidelines and previous studies suggest that credit rating, issuer type, certification, reporting, and use of proceeds are important factors to be considered when issuing GBs. However, little is known about whether these elements are also recognized as key determinants of GBs by investors. By conducting a discrete choice experiment, this study demonstrated that these factors increase investors' preference for GBs, although they remained indifferent to the type of green project to be funded through GBs. The study also investigated how measures of investors’ social responsibility affect the preference for GBs and found that investors with higher altruism and levels of environmental awareness demonstrated a higher willingness to invest in GBs. The results indicate that the issuance of GBs should be aligned with international GB guidelines and underline the importance of providing information on how GBs can contribute to reducing environmental impacts.