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Evaluating TCFD reporting—A new application of zero-shot analysis to climate-related financial disclosures

Author

Listed:
  • Alix Auzepy
  • Elena Tönjes
  • David Lenz
  • Christoph Funk

Abstract

We examine climate-related disclosures in a large sample of reports published by banks that officially endorsed the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD). In doing so, we introduce a new application of the zero-shot text classification. By developing a set of fine-grained TCFD labels, we show that zero-shot analysis is a useful tool for classifying climate-related disclosures without further model training. Overall, our findings indicate that corporate climate-related disclosures increased after the launch of the TCFD recommendations and following individual endorsements. However, there are marked differences in the extent of reporting by recommended disclosure topic, suggesting that some recommendations have not yet been fully met. Our findings yield important conclusions for the design of climate-related disclosure frameworks.

Suggested Citation

  • Alix Auzepy & Elena Tönjes & David Lenz & Christoph Funk, 2023. "Evaluating TCFD reporting—A new application of zero-shot analysis to climate-related financial disclosures," PLOS ONE, Public Library of Science, vol. 18(11), pages 1-23, November.
    • Handle: RePEc:plo:pone00:0288052
    DOI: 10.1371/journal.pone.0288052
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    References listed on IDEAS

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    1. Philipp Krueger & Zacharias Sautner & Laura T Starks, 2020. "The Importance of Climate Risks for Institutional Investors," The Review of Financial Studies, Society for Financial Studies, vol. 33(3), pages 1067-1111.
    2. Rajna Gibson Brandon & Simon Glossner & Philipp Krueger & Pedro Matos & Tom Steffen, 2022. "Do Responsible Investors Invest Responsibly? [Why and how investors use ESG information: evidence from a global survey]," Review of Finance, European Finance Association, vol. 26(6), pages 1389-1432.
    3. Bingler, Julia Anna & Kraus, Mathias & Leippold, Markus & Webersinke, Nicolas, 2022. "Cheap talk and cherry-picking: What ClimateBert has to say on corporate climate risk disclosures," Finance Research Letters, Elsevier, vol. 47(PB).
    4. Samira Demaria & Sandra Rigot, 2020. "Corporate environmental reporting: Are French firms compliant with the Task Force on Climate Financial Disclosures' recommendations?," Post-Print halshs-03021201, HAL.
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    Cited by:

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    2. de Almeida, Ana Carla Leite & Bueno, Carlos & Dale, Allan & Hay, Rachel & Jarihani, Ben & Everingham, Yvette & Lockie, Stewart, 2025. "Integration of ESG standards in Australian sugarcane farming: A co-design approach to accelerate ESG adoption and innovation," Agricultural Systems, Elsevier, vol. 229(C).

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