Unveiling the Power of ESG: A Cross-Market Exploration of Environmental, Social, and Governance Factors on Bond Pricing in European, Japanese, and US Corporate Bond Markets

Abstract

This study explores the influence of Environmental Social and Governance ESG factors on corporate bond markets focusing on the European Japanese and US markets The research demonstrates that ESG ratings have a significant impact on bond pricing and risk assessment By examining yield curves the study reveals that companies with lower ESG scores are perceived as riskier leading to higher yield spreads on their bonds This effect is consistent across the USA market where responsible management practices are positively valued by creditors In contrast the European market displays variations in the relationship between ESG ratings and yield spreads while the Japanese market demonstrates a negative perception of non-financial aspects in corporate management