Shine on Sustainable Bonds Wears Off

Summary: Rising regulatory scrutiny is damping investor appetite for sustainable bonds, especially those issued by riskier companies. Bonds sold to fund environmentally friendly projects and companies generally fetch higher prices and lower yields than conventional bonds. This greenium, though, has been shrinking in recent weeks as global regulators forge ahead on new disclosure rules and investors start to look more closely at companies claims about sustainability.

Questions:

1. What is the "greenium"?
2. According to the article, what factors are leading to a shrinking of the "greenium"?
3. What factors likely led to the emergence of the "greenium"?
4. Why are some investors being more careful in evaluating purchasing sustainable bonds from lower-rated issuers?