The Determinants of Green Bond Issuers: Does Sustainability Reporting Matter?

This study investigates the determinants for green bond issuers and whether the sustainability report becomes a significant factor in the likelihood of green bond issuance. Using Indonesia’s CBond database , the study employs data for sustainability bonds issued by public and private companies between 2017 and 2021. A total of 515 firm-year observations data are analyzed in the study, including several Firm Characteristics including control variables (Debt to Asset Ratio, Return on Assets, Sales Growth, Firm Type, Firm Size, Firm Ownership and Firm IPO Status). The study finds that an issuer’s sustainable report has a significant positive influence on the likelihood of a firm issuing a green bond. Companies that publish sustainability reports are more likely to issue green bonds green bonds. From the data interaction between Firm Type (financial or non-financial Institutions), the study finds that non-financial institutions that produce sustainability reports are more likely to issue a green bond relative to the financial institutions. This study contributes to the discussion about the role of sustainability reports as a contributing factor to green financing activity. The issuance of sustainability reports may improve a company’s ESG awareness, encouraging them to issue green bonds. Alternatively, the publication of a sustainability report may act as a legitimacy device to facilitate the green bond issue with its lower cost of financing.