Kölbel, Julian; Lambillon, Adrien-Paul - 2023
We examine the novel phenomenon of sustainability-linked bonds (SLBs). These bonds’ coupon is contingent on the issuer … achieving a predetermined sustainability performance target. We estimate the yield differential between SLBs and non … case of failure of the sustainability performance target. This suggests that SLB issuers can benefit from a ’free lunch’, i …