Debt, data, and decarbonisation: a research agenda for a fossil fuel phase-out bond index project

Abstract This article outlines a research agenda examining investors’ use of a novel corporate bond index methodology. Three important investor goals are considered: (1) diverting primary market capital away from fossil fuel expansion, (2) increasing the cost of capital for fossil fuel expansionists, and (3) informing public discourse on the financing of fossil fuel expansionism. In presenting a research programme that includes quantitative analysis, qualitative case studies, and experimental methods, we propose a set of research questions to examine whether and to what extent bond investors’ use of index-based exclusions and inclusions may affect targeted firms’ financing costs, capital-raising capacity, investment or underwriting decisions, and ultimately their expansion and phase-out activities. The research agenda also addresses the underexplored question as to whether and how investors can influence public discourse through their investment, engagement, and communications. The research programme seeks to examine whether and to what extent investors can advance the goals of key international climate agreements such as the Paris Agreement and the proposed Fossil Fuel Treaty (FFT). In doing so, the research programme aims to address a critical gap in the sustainable finance literature, which has to date focused predominantly on equity rather than debt markets. Special Issue : Leaving Fossil Fuel Underground.