Assessing the data challenges of climate-related disclosures in european banks. A text mining study

Ángel Iván Moreno and Teresa Caminero
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Ángel Iván Moreno: Banco de España
Teresa Caminero: Banco de España

No 2326, Working Papers from Banco de España

Abstract: The Intergovernmental Panel on Climate Change (IPCC) estimates that global net-zero should be achieved by 2050. To this end, many private firms are pledging to reach net-zero emissions by 2050. The Climate Data Steering Committee (CDSC) is working on an initiative to create a global central digital repository of climate disclosures, which aims to address the current data challenges. This paper assesses the progress within European financial institutions towards overcoming the data challenges outlined by the CDSC. Using a text-mining approach, coupled with the application of commercial Large Language Models (LLM) for context verification, we calculate a Greenhouse Gas Disclosure Index (GHGDI), by analysing 23 highly granular disclosures in the ESG reports between 2019 and 2021 of most of the significant banks under the ECB’s direct supervision. This index is then compared with the CDP score. The results indicate a moderate correlation between institutions not reporting to CDP upon request and a low GHGDI. Institutions with a high CDP score do not necessarily correlate with a high GHGDI.

Keywords: ESG; sustainability; environment; climate change; carbon emissions; natural language processing; climate data challenges; OpenAI’s ChatGPT; Google’s text-bison (search for similar items in EconPapers)
JEL-codes: C88 G32 Q56 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2023-09
New Economics Papers: this item is included in nep-ban, nep-big, nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2326

DOI: 10.53479/33752

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