Green bonds: Green investments or greenwashing?

The key to determining whether green bonds have a positive impact is to examine whether firms issuing green bonds actually increase their green investments or merely pretend to do so, i.e., engage in greenwashing. Our findings indicate that the issuance of green bonds has a positive impact on the quantity of companies' green patent applications. However, this increase in quantity does not correspond to an improvement in the quality of green patents. Specifically, we observe that a growing proportion of these patents are non-invention patents applications, the granted proportion of green patents shows a decline and the citation rate of green patents does not experience improvements. Our results suggest that companies issuing green bonds do not substantially enhance their capacity for green innovation but instead focus on strategically pursuing green innovation.