Discussion paper

DP16898 Do the SDGs affect sovereign bond spreads? First evidence

We study the relation between a country's performance on the United Nations' Sustainable Development Goals (SDGs) and its sovereign bond spread. Using a novel country-level SDG measure for a global sample of countries, we find a significantly negative relation between SDG performance and credit default swap (CDS) spreads, while controlling for traditional macroeconomic factors. This effect is stronger for longer maturities, in line with the notion that the SDGs represent long-term objectives. The results are most consistent with perceived default risk driving this relation, rather than investor preferences. In sum, our initial evidence suggests that investing in the SDGs provides governments with financial benefits besides ecological and social welfare.


Ten Bosch, E, M Van Dijk and D Schoenmaker (2022), ‘DP16898 Do the SDGs affect sovereign bond spreads? First evidence‘, CEPR Discussion Paper No. 16898. CEPR Press, Paris & London. https://cepr.org/publications/dp16898