Bank Climate Commitments Predict Green Lending in Emerging Markets

CEPR Discussion Paper DP20640 documents that banks’ voluntary climate commitments predict both their green lending practices and their borrowers’ environmental investments.

• Main announcement/action: The paper uses structured surveys of 644 bank CEOs and heads of credit across 33 low- and middle-income countries to create indices of green management and green lending practices, and finds that banks signing international climate initiatives (talk) indeed exhibit stronger green practices (walk) than non-signatories; it then merges bank-level data with surveys of 4,719 firms showing firms borrowing from climate-committed banks are more likely to undertake green investments.
• Methods, data and publication details: The study exploits geocoded bank branch and firm locations to detect spatial matching (environmentally-oriented firms preferentially borrow from nearby climate-committed banks); published as CEPR Discussion Paper No. 20640, CEPR Press, Paris & London, 2025. URL: https://cepr.org/publications/dp20640