Karolina Kuczbajska
GD901 Research Dissertation
"Are green bonds just another form of greenwashing? Analysis of the corporate green bonds market and the impact of issuances on companies’ greenhouse gas emissions"
Connect with me:
Dissertation context
In my Research Dissertation, I managed to tie my diverse interests together. I drew on my knowledge from a bachelor's degree in Management and Marketing, industry experience, and a passion for sustainability and the environment to explore a thought-provoking topic.
Even though my business background and a secured role in a strategy consulting company might have made either a workplace project or a practice-based project the obvious choice for my capstone, I intentionally chose the research dissertation. Since I hadn’t had the chance to write a thesis during my undergraduate studies, this was a personal milestone and even a bucket-list achievement for me – and it turned out to be a challenging yet deeply rewarding experience.
Initially, it was supposed to be a strictly quantitative study, but the complexity of definitions and policies led me to adopt a mixed-methods exploratory sequential design. I began with qualitative research, performing a thematic analysis of greenwashing, complemented by policy reviews and a case study research design. This was followed by the quantitative component, in which I used two statistical methods: an event study and propensity score matching. These methods allowed me to assess whether green bond issuances impact corporate environmental performance by analysing emissions trends before and after issuances, as well as comparing issuers’ emissions with those of non-issuers (counterfactuals).
Dissertation supervisor
Dr Jose Martin Lima Velazquez
Goals/aims
We are living in the Anthropocene – a time when humanity’s impact on the planet has reached unprecedented levels. Among the many challenges we face, financing sustainable development stands out as pivotal. With businesses accounting for an estimated 70-80% of global greenhouse gas emissions, their role is critical. Hence, we must ask: are they taking meaningful action, or merely paying lip service to sustainability?
Corporate sustainable investment offers a promising pathway toward a greener future. My paper focuses on a specific subset of this field – green bonds, which are fixed-income financial instruments, designed to finance (or refinance) green investments or sustainable projects.
However, the rise of "greenwashing" has cast doubt on the credibility of corporate sustainability claims and actions. The growing popularity of green bonds alone is insufficient to determine whether businesses are genuinely contributing to environmental protection and reducing human-induced emissions.
Therefore, the paper primarily aims to answer the following research questions:
- Which factors could act as the major drivers for companies to issue green bonds?
- What are the instances of greenwashing with green bonds and is greenwashing plausible under current regulations?
- What is the effect of green bond issuances on corporate GHG emissions?
- Do the GHG emissions differ between green bond issuers and non-issuers?
Ultimately, this research seeks to deepen comprehension of financial and environmental practices, making the issue more accessible and understandable to a larger audience. This research could benefit investors by raising awareness of the impact of their investment choices and help issuers recognise the controversies in the green bond market, potentially motivating higher corporate transparency.
Outcomes/conclusions
- The research offers a theoretical contribution, designing a new framework for understanding greenwashing in the context of green bonds, both in its direct and indirect forms.
- It shows that greenwashing is not the rationale behind green bond issuance but rather a tool used, often alongside signalling, for the overall purpose of obtaining financial benefits or avoiding risks (reputational, regulatory, financial, etc.).
- Event study shows a possible reduction in emissions post-issuance, however inconsistent statistical significance across observations means greenwashing cannot be ruled out.
- Green bond issuers also tend to have higher emissions and reduce them more slowly than their matched counterfactuals. Therefore, reductions in emissions post-issuance might just reflect general market trends.
- With instances of greenwashing identified through case studies and the lack of robust green bond regulations or legal enforcement mechanisms, this study finds no conclusive evidence to dismiss greenwashing.
- This research emphasises the importance of careful investor screening and a need for a regulatory reform to foster a more reliable green bond market.
Future research aspirations
After completing the MASc in Global Sustainable Development, I joined a strategy consulting firm. I am confident this role will provide me with valuable insights into various sectors and businesses while building a strong foundation for my career. In the future, I hope to align my professional path more closely with sustainability. While I might consider pursuing a PhD to explore the topic of green bonds further in the future, potentially on a part-time basis, I currently feel I can drive greater positive change within the industry by applying the valuable insights I’ve gained throughout my Master’s.
