Transparent green bond allocation leads to lower financing costs for issuers.
The study looked at how being clear about how green bond money is used affects the interest rates on those bonds. They used data from EU state agencies' green bonds and found that when investors know exactly where their money is going, they ask for lower returns. Bonds with higher credit ratings and shorter time left to mature also have lower interest rates. Being transparent about how bond money is used can lead to better financing terms.