Cheap Talk and Cherry-Picking: What ClimateBert has to say on Corporate Climate Risk Disclosures

Bingler JA, Kraus M, Leippold M (2021)


Publication Type: Journal article, Original article

Publication year: 2021

Journal

Original Authors: Julia Anna Bingler, Mathias Kraus, Markus Leippold

DOI: 10.2139/ssrn.3796152

Abstract

Disclosure of climate-related financial risks greatly helps investors assess companies' preparedness for climate change. Voluntary disclosures such as those based on the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD) are being hailed as an effective measure for better climate risk management. We ask whether this expectation is justified. We do so with the help of a deep neural language model, which we christen ClimateBert. We train ClimateBert on thousands of sentences related to climate-risk disclosures aligned with the TCFD recommendations. In analyzing the disclosures of TCFD-supporting firms, ClimateBert comes to the sobering conclusion that the firms' TCFD support is mostly cheap talk and that firms cherry-pick to report primarily non-material climate risk information. From our analysis, we conclude that the only way out of this dilemma is to turn voluntary reporting into regulatory disclosures.

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How to cite

APA:

Bingler, J.A., Kraus, M., & Leippold, M. (2021). Cheap Talk and Cherry-Picking: What ClimateBert has to say on Corporate Climate Risk Disclosures. Social Science Research Network. https://doi.org/10.2139/ssrn.3796152

MLA:

Bingler, Julia Anna, Mathias Kraus, and Markus Leippold. "Cheap Talk and Cherry-Picking: What ClimateBert has to say on Corporate Climate Risk Disclosures." Social Science Research Network (2021).

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