Green bond issuance and corporate ESG performance: Steps toward green and low-carbon development

Green financial instruments play an extremely important role in promoting green, low-carbon development and helping to achieve carbon neutrality. But they have also been criticized for the diversion of green funds by companies to "greenwashing". This paper constructs the empirical models to test the impact of green bonds on corporate ESG performance. It is found that green bond issuance can significantly improve the ESG performance of corporates, on average increasing the ESG scores by about 20.5%. The mechanism test shows that green bond issuance can improve the ease of corporate financing, reduce financing costs and improve the maturity structure of corporate debt. In addition, the easing of financing constraints and the "earmarking" of green funds by green bond can benefit corporate governance and corporate environmental governance, as evidenced by the fact that green bond issuance can improve corporate profitability, growth, green innovation, and green responsibility. Heterogeneity analysis shows that the effect of green bond issuance on ESG performance is more pronounced among private corporates and corporates with high media attention.