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Banks' climate commitments and credit to brown industries: new evidence for France


  • Jean-Stéphane Mésonnier


In this paper, I investigate whether and how banks align green words with deeds in terms of credit allocation across more or less carbon-intensive industries in France. I use a rich dataset of bank credit exposures across some fifty industries and two size classes of borrowing firms for the main banking groups operating in France, which I merge with information on industries' greenhouse gas emission intensities and a score for banks' self-reported climate-related commitments over 2010-2017. I find evidence that higher levels of self-reported climate commitments by banks are associated with less lending to large corporates in the five brownest industries. However, lending to SMEs across more or less carbon-intensive industries remained unrelated to banks' commitments to green their business. Since SMEs are not required to report on their carbon emissions, while large firms are, these findings suggest that devising an appropriate carbon reporting framework for small firms is likely to enhance the decarbonization of bank lending.

Suggested Citation

  • Jean-Stéphane Mésonnier, 2019. "Banks' climate commitments and credit to brown industries: new evidence for France," Working papers 743, Banque de France.
  • Handle: RePEc:bfr:banfra:743

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    References listed on IDEAS

    1. Marion AUBERT & William BACH & Sébastien DIOT & Lucas VERNET, 2019. "Les groupes bancaires français face au risque climatique," Analyse et synthèse 101, Banque de France.
    2. Boermans, Martijn A. & Galema, Rients, 2019. "Are pension funds actively decarbonizing their portfolios?," Ecological Economics, Elsevier, vol. 161(C), pages 50-60.
    3. Goss, Allen & Roberts, Gordon S., 2011. "The impact of corporate social responsibility on the cost of bank loans," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1794-1810, July.
    4. Nitsche, Christin & Schröder, Michael, 2015. "Are SRI funds conventional funds in disguise or do they live up to their name?," ZEW Discussion Papers 15-027, ZEW - Leibniz Centre for European Economic Research.
    5. Crifo, Patricia & Sinclair-Desgagné, Bernard, 2014. "The Economics of Corporate Environmental Responsibility," International Review of Environmental and Resource Economics, now publishers, vol. 7(3-4), pages 279-297, December.
    6. Krüger, Philipp, 2015. "Corporate goodness and shareholder wealth," Journal of Financial Economics, Elsevier, vol. 115(2), pages 304-329.
    7. Rajna Gibson & Philipp Krueger, 2017. "The Sustainability Footprint of Institutional Investors," Swiss Finance Institute Research Paper Series 17-05, Swiss Finance Institute.
    8. Trinks, Arjan & Scholtens, Bert & Mulder, Machiel & Dam, Lammertjan, 2018. "Fossil Fuel Divestment and Portfolio Performance," Ecological Economics, Elsevier, vol. 146(C), pages 740-748.
    9. Juan Fernandez de Guevara & Joaquin Maudos, 2011. "Banking competition and economic growth: cross-country evidence," The European Journal of Finance, Taylor & Francis Journals, vol. 17(8), pages 739-764.
    10. Griffin, Paul A. & Jaffe, Amy Myers & Lont, David H. & Dominguez-Faus, Rosa, 2015. "Science and the stock market: Investors' recognition of unburnable carbon," Energy Economics, Elsevier, vol. 52(PA), pages 1-12.
    11. Philipp Krueger & Zacharias Sautner & Laura T. Starks, 2018. "The Importance of Climate Risks for Institutional Investors," Swiss Finance Institute Research Paper Series 18-58, Swiss Finance Institute.
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    More about this item


    : Green banks; Greenhouse Gas Emissions; Climate Change.;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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