Climate risk, ESG performance, and ESG sentiment in US commercial banks

Otgontsetseg Erhemjamts, Kershen Huang and Hassan Tehranian

Global Finance Journal, 2024, vol. 59, issue C

Abstract: 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.

Keywords: Commercial banks; Climate risk; ESG performance; And ESG sentiment (search for similar items in EconPapers)
JEL-codes: G11 G12 G14 G21 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:59:y:2024:i:c:s1044028323001199

DOI: 10.1016/j.gfj.2023.100924

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