The ‘greenium’: still here, or already gone?

For a long time seen as clear evidence that sustainable finance could also be economically advantageous, the “greenium” — the more favourable financing premium granted to green bonds — now appears to be fading.

Once presented as a strong incentive for issuers, this cost differential is gradually disappearing, giving way to new drivers: issuer credibility, the robustness of regulatory frameworks, and market maturity.

A real advantage, but increasingly less structural

Between 2019 and 2022, according to the Banque de France, French companies benefited from an average green premium reaching up to –17 basis points in 2020, driven by strong investor appetite and limited supply.

Since 2023, this advantage has diminished across most European markets. Green and conventional bonds are now converging toward yield parity, signalling that the market has stabilised.

Maintaining a greenium today depends on several parameters:

• Sector structure: it remains present in finance, real estate, and utilities — sectors where transition plans and non-financial transparency are more clearly defined.
• Credibility and market liquidity: the green premium persists in France and the Netherlands, but not in Germany or Italy.
• Quality of reference frameworks: issuances aligned with strict standards, notably the EU Green Bond Standard (EuGBS), show the strongest premiums thanks to enhanced governance and independent external verification.

A similar trend for Sustainability-Linked Bonds

Sustainability-Linked Bonds (SLBs) are following the same trajectory.

Initial issuances exhibited a greenium close to –30 basis points in 2021 (Kölbel & Lambillon, 2023), but this advantage disappeared as early as 2022.

Remaining spreads — around –1 to –2 basis points — are now statistically weak and economically marginal.

Notably, this difference is not linked to built-in penalties (“step-ups”) but to a novelty effect — strong investor demand for early labelled issuers. This underlines the fragility of part of the “impact” narrative when financial incentives remain symbolic.

An instrument reaching maturity

The gradual disappearance of the greenium does not signal the end of green bonds, but rather their transition into a mature market phase.

Their relevance now goes beyond cost advantages, focusing instead on structural benefits:

• privileged access to specialised ESG investors,
• improved alignment with EU disclosure and taxonomy frameworks,
• enhanced reputation and stronger stakeholder confidence,
• anticipation of future prudential and regulatory requirements.

Despite a slight market slowdown, green bonds still represent the vast majority of sustainable issuances, confirming their central role in financing the transition.

A perspective developed by the ESG Lab

At the ESG Lab of the Institut Louis Bachelier, our work aims to connect financial data, academic research, and regulation to better understand the true drivers of sustainable finance.

These analyses help advance the reflection on how financial instruments can evolve from a “price premium” logic toward a premium of credibility and real impact.

On the occasion of COP30 in Belém, on 14–15 November, João Sertã, Director of the ESG Lab, will present this research during the thematic sessions dedicated to finance, energy, and carbon markets.

Read the full analysis (in English):
“The Greenium: Still There, or Fading Away?” on LinkedIn

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