Browsing by Author "Caria, Mariana Cabral"
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- The effectiveness of green bonds in reducing carbon riskPublication . Caria, Mariana Cabral; Venter, ZoëThis study analyses the role of green bonds in mitigating carbon-related risks and supporting environmental growth in the European and US markets. Created approximately two decades ago, green bonds are used to finance environmentally friendly projects and to incentivize companies to adopt sustainable practices. This study uses a variety of models, including the CAPM, three-factor, and five-factor models, to investigate how green bonds affect the firms' cumulative abnormal returns (CARs) during carbon-related events using event studies and regression analysis. The findings show that larger companies with strong ESG ratings better manage risks, whilethose with higher emissions are penalized by the market. Compared to the US, the European market reacts more strongly to carbon risks. While challenges like inconsistent regulations and greenwashing still exist, this thesis highlights the potential of green bonds to support sustainability. By looking at both the benefits and drawbacks of green bonds, it offers practical insights for investors, policymakers, and businesses striving for a low-carbon future.