Previous title was "Financial Incentives for US Corporate Green Bonds" 

Abstract: This study examines the financial advantages of Green Bonds (GB) and Sustainability Bonds (SB) in the ESG bond market, identifying the underwriting fee discount as a primary incentive determined by financial intermediaries. GB issuers secure an average underwriting fee discount of 0.78% and a green premium of 20 basis points (approximately $1.3 million). However, this advantage is transient; by 2023, GB benefits erode and reverse, resulting in higher net costs. In contrast, SBs offer salient financial incentives more than double those of GBs, though significant gains are exclusive primarily to debut issuers. Reflecting market concerns about potential greenwashing, seasoned issuers face higher costs as a penalty. Furthermore, causal spillover effects exist for both labels; SB issuers face higher yields on subsequent ordinary debt, while GB issuers incur higher underwriting fees. Overall, the findings highlight the complex role of financial intermediaries in pricing labeled bonds and monitoring reputational risk.