Cheap Talk in Corporate Climate Commitments: The effectiveness of climate initiatives

Bingler JA, Kraus M, Leippold M, Webersinke N (2024)

Publication Language: English

Publication Type: Journal article

Publication year: 2024

Journal

Journal of Banking & Finance Elsevier

Book Volume: 164

DOI: 10.1016/j.jbankfin.2024.107191

Abstract

Corporate climate disclosures are considered an essential prerequisite to managing climate-related financial risks. At the same time, current disclosures are imprecise, inaccurate, and greenwashing-prone. We introduce a deep learning approach to enable comprehensive climate disclosure analyses by fine-tuning the ClimateBERT model. From 14,584 annual reports of the MSCI World index firms from 2010 to 2020, we extract the amount of cheap talk, defined as the share of precise versus imprecise climate commitments. We then test various hypotheses by linking three different climate initiatives, namely the Task Force on Climate-Related Financial Disclosure, the Science-Based Targets Initiative, and the Climate Action 100+, to the economic channels of signaling, credibility, and active engagement. In particular, we ask whether these initiatives decrease cheap talk by disciplining companies in how they define and disclose actionable climate commitments in their annual reports.

Authors with CRIS profile

Mathias Kraus Juniorprofessur für Data Analytics Nicolas Webersinke Lehrstuhl für Betriebswirtschaftslehre, insbesondere Finanzierung und Banken

Involved external institutions

Eidgenössische Technische Hochschule Zürich (ETHZ) / Swiss Federal Institute of Technology in Zurich CH Switzerland (CH) University of Zurich / Universität Zürich (UZH) CH Switzerland (CH)

How to cite

APA:

Bingler, J.A., Kraus, M., Leippold, M., & Webersinke, N. (2024). Cheap Talk in Corporate Climate Commitments: The effectiveness of climate initiatives. Journal of Banking & Finance, 164. https://doi.org/10.1016/j.jbankfin.2024.107191

MLA:

Bingler, Julia Anna, et al. "Cheap Talk in Corporate Climate Commitments: The effectiveness of climate initiatives." Journal of Banking & Finance 164 (2024).

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