JOURNAL: Price of greenness: Classifications and green bond premiums
Summary
Authors:
David Dekker
Chih-Yueh Huang
Dimitrios Christopoulos
Heriot-Watt University
Price of greenness: Classifications and green bond premiums
The Quarterly Review of Economics and Finance
December 2025
This paper explores how financial markets signal support for green investments through the green bond premium, or “greenium”—the extra value investors place on environmentally friendly bonds. By comparing over 800 pairs of green and non-green bonds, the study finds that greenium varies depending on credit ratings and how bond proceeds are used. This suggests inefficiencies in the market, as certification costs remain flat despite these differences. Surprisingly, green taxonomies, which aim to provide clarity, may actually increase uncertainty and lead to poor selection of truly green projects. These issues could slow the transition to a low-carbon economy.