Cheap talk and cherry-picking: What ClimateBert has to say on corporate climate risk disclosures

Julia Anna Bingler, Mathias Kraus, Markus Leippold and Nicolas Webersinke

Finance Research Letters, 2022, vol. 47, issue PB

Abstract: Disclosure of climate-related financial risks greatly helps investors assess companies’ preparedness for climate change. Voluntary disclosures such as those based on the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD) are being hailed as an effective measure for better climate risk management. We ask whether this expectation is justified. We do so by training ClimateBERT, a deep neural language model fine-tuned based on the language model BERT. In analyzing the disclosures of TCFD-supporting firms, ClimateBERT comes to the sobering conclusion that the firms’ TCFD support is mostly cheap talk and that firms cherry-pick to report primarily non-material climate risk information.

Keywords: Climate-risk disclosure; Voluntary reporting; TCFD recommendations; Natural language processing (search for similar items in EconPapers)
JEL-codes: C8 G2 G38 M48 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000897

DOI: 10.1016/j.frl.2022.102776

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