Climate risk, ESG performance, and ESG sentiment in US commercial banks
We measure US commercial banks' exposure to and materiality of physical climate risk by examining branch-level data. Our location-specific climate risk measure is pos- itively associated with banks' ESG performance and negatively associated with stake- holders' sentiment regarding ESG...
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Published in | Global finance journal Vol. 59; p. 100924 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Elsevier Inc
01.03.2024
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Subjects | |
Online Access | Get full text |
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Summary: | We measure US commercial banks' exposure to and materiality of physical climate risk by examining branch-level data. Our location-specific climate risk measure is pos- itively associated with banks' ESG performance and negatively associated with stake- holders' sentiment regarding ESG issues. Furthermore, banks that experience climate risk shocks, as proxied by NOAA billion-dollar disasters, improve ESG performance and receive positive ESG sentiment accordingly compared with matched banks. While negative sentiment due to climate risk exposure is associated with worsened financial performance, stronger ESG engagement mitigates this adverse effect. |
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ISSN: | 1044-0283 1873-5665 |
DOI: | 10.1016/j.gfj.2023.100924 |