The Impact of ESG Performance on Financing Costs for New Energy Companies: A Bond Credit Spread Perspective

Abstract

With the promotion of the goal of “double carbon”, the new energy industry has ushered in an unprecedented development opportunity. However, financing difficulties and high costs still hinder its rapid growth. As a key indicator of enterprise’s sustainable development, ESG (environmental, social and governance) performance has theoretical and practical significance for reducing financing costs. Taking new energy listed companies as research samples, this paper selects the bond issuance data from 2022 to 2023 to study the impact of ESG performance on financing costs in an empirical way, measured by credit spreads. The results show that there is a significant negative correlation between ESG performance and credit spread-better ESG performance is related to narrower credit spread and lower financing cost. Further analysis shows that the improvement of the dimension of environment (e) contributes the most to reducing the financing cost, The governance dimension (G) plays a relatively limited role. These findings not only enrich ESG literature, but also provide empirical evidence for new energy companies seeking to improve financing environment by strengthening ESG performance. They also provide insights for regulators who want to improve green financial policies.