We examine in this paper sustainability-linked bonds (SLBs) whose issuance now totals more than USD 200 bn. A typical SLB has a coupon step-up linked to the issuer achieving a predetermined sustainability performance target. First, we recall why a SLB and a counterfactual vanilla bond issued by the same borrower should be and actually are priced with the same issuer yield.
Our analysis then shows that the SLBs parameters (mainly step-up period as a fraction of the bond’s tenor, coupon step-up size and step-up activation probability) cannot be manipulated to lower the issuer’s cost of capital significantly, which is presumed to be the very goal of the SLB product. There is a structural design flaw in the SLB mechanism: setting a significant coupon step-up does not suit the issuer’s nor the investors’ interests, considering conditionality. This creates a no win situation for the issuer and investors alike and explains the “benign” use of SLBs by current market participants.
Séminaire en présence d'Adam George (SOAS, University of London). Adam George présente un modèle macroéconomique SFC environnemental britannique intégrant émissions de CO2 et investissements verts de tous les agents économiques. Le modèle trimestriel analyse l'impact des politiques énergétiques selon le rapport capital vert/capital conventionnel. Quatre scénarios fiscaux verts sont testés (2022-2035) : taxe carbone, investissement...
Le laboratoire GAEL (Grenoble Applied Economics Laboratory) et la Chaire Energie et Prospérité organisent un workshop sur l’économie de la bioénergie les jeudi 9 et vendredi 10 octobre 2025 sur le campus universitaire de Grenoble.