Title: Sustainability Targets, Assurance, and the Cost of Debt: Evidence from Green Bonds

Speaker: Yuhui Wu, Professor, School of Management, Xiamen University

Time: 15:00-16:30, April 27th, 2026 (Monday)

Venue: Room 1008, Mingde Business Building (Zhongguancun Campus)

Language: English/Chinese

ABSTRACT:

We examine the role of sustainability targets in green bonds and the extent to which third-party assurance shapes target difficulty and debt outcomes. Using detailed green bond-project-pollutant-year data, we document three main findings. First, setting a sustainability target is associated with a lower cost of debt at issuance. Second, sustainability target difficulty is positively associated with secondary-market trading costs. Third, assurance influences target-setting both ex ante and ex post: it is negatively associated with target difficulty, and conditional on a given level of difficulty, it weakens the positive association between target difficulty and trading costs. Heterogeneity analysis shows that the effects of assurance are concentrated in clean energy projects, and that assurance provided by accounting firms and rating agencies is associated with lower target difficulty, whereas assurance provided by consulting firms is linked to higher difficulty. Overall, our findings extend the prior target-setting literature that primarily focuses on financial targets, and the emerging accounting literature on sustainability assurance, providing the first large-scale evidence on sustainability targets and the role of assurance in green bond market.