<p>We investigate the relationship between firms’ green bond issues and the change in their greenhouse gas emissions. We employ an Extended Two-Way Fixed Effects model and the ‘green leverage’ ratio, being the ratio of green bonds to total debt issued, to improve our understanding of the role of green bonds. It shows that greenhouse gas emissions start to decrease significantly three years after issuing a green bond and continue to do so afterwards. This can be explained by the fact that it takes time before new projects– financed by the proceeds of green bonds– have been developed and integrated by the firm issuing the bonds and become fully operational. We conclude that issuing green bonds is a credible signal that communicates firms’ commitment to address climate change to outside investors and other stakeholders.</p>