Why a ‘greenium’ is so hard to detect

Companies are splitting the yield premium with their brown bonds, study finds.

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The yield difference between brown bonds and green bonds is often hidden.

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — There’s a reason why researchers have had such difficulty detecting a “greenium.” It’s often hidden.

I’m referring to the yield difference between regular (or “brown”) bonds and “green” bonds — those whose proceeds are dedicated to reducing a company’s or government’s carbon footprint. If a greenium didn’t exist, it would seem to mean that green bond issuance is having no real-world significance in reducing green projects’ cost of capital.