Projects financed by green bonds have not always resulted in decreased carbon emissions at the firm level. This column – published on the 5th anniversary of the Paris Agreement – outlines three features of a simple rating system that could both encourage firms to reduce their carbon footprint and provide a useful signal to investors. By focusing on firms’ carbon intensity (emissions relative to revenue), this system would complement existing green bond labels while embracing the features most conducive to decisively lowering carbon emissions.
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GREEN BONDS/PARIS AGREEMENT/CARBON EMISSIONS – Green bonds and carbon emissions: Exploring the case for a rating system at the firm level (Torsten Ehlers, Benoit Mojon, Frank Packer, Luiz A. Pereira da Silva, VOXEU)