Green Bonds – the solution to finance sustainable tourism?

Abstract

Sustainable Finance comprises any financial service or product that incorporates sustainability criteria in its characteristics. It intends to contribute to Sustainable Development, financing, for example: innovation, conservation and infrastructure, and promoting an efficient economy in the use of resources, minimizing negative impacts on Environment and Society. At the same time, Sustainable Finance promotes the stability of financial markets, through the consideration of social, environmental and corporate governance risks associated with the activities of agents in those markets. The sustainable bond market provides an alternative to traditional financing (Agliardi & Agliardi, 2019). Green bonds are fixed income securities that exclusively finance green projects with environmental or climate benefits (Weber & Saravade, 2019). The aim of this study is to analyse to what extent green bonds are or are not an effective and efficient instrument for financing sustainable tourism. In order to achieve our objective, we present the case of the first hotel group in the world to issue Green Bonds, The Pestana Group, that is the largest Portuguese hotel chain. The study will present contributions at several levels: literature and practice. It makes contributions to the literature on relationships between sustainable finance and sustainable tourism. This was the first group in the tourism industry to take a decision with innovative characteristics and a solution that opens doors to sustainable tourism financing. The decision to use Green Bonds allowed the hotel group to allocate financing to investments that were underway that incorporate solutions that fit into sustainable tourism. The example of Pestana Group, namely through the swot analysis of the several financing alternatives for its new projects with a strong sustainable component, may contribute to the promotion of research in this field and to promote the option for solutions of this type in other companies in the tourism industry and in other industries. In terms of methodology, this paper uses the case study method. This method encourages broad exploration and provides a rich and in-depth understanding of empirical phenomena (Yin, 2014). Case studies should be conducted when much of the knowledge on a certain subject remains unknown (Meredith, 1998). It is intended, with the use of this methodology, to report the facts as succeeded, to describe situations or facts, so knowledge about the phenomenon under study and to prove or contrast the effects and relations present in the case.