Carbon Emissions and Debt Maturity Structure: Do ESG Controversies Matter?

This study investigates the impact of carbon emissions on a firm's debt maturity structure and the role of ESG controversies on this dynamic. Analyzing a sample comprising firms listed on the FTSE 250 from 2012 to 2021, the results indicate that firms with lower carbon-emissions benefit from a longer debt maturity, due to lower perceived risk than firms with higher carbon-emissions. The study further highlights that ESG controversies exacerbate the effect of carbon emissions on debt maturity. These findings should motivate firms to advance their decarbonization efforts, consequently leading to significant economic benefits.