Cheap Talk in Corporate Climate Commitments: The effectiveness of climate initiatives

Julia Anna Bingler, Mathias Kraus, Markus Leippold and Nicolas Webersinke
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Julia Anna Bingler: Council on Economic Policies (CEP); ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich
Mathias Kraus: University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg
Markus Leippold: University of Zurich; Swiss Finance Institute
Nicolas Webersinke: riedrich-Alexander-Universität Erlangen-Nürnberg

No 22-54, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Corporate climate disclosures are considered an essential prerequisite to managing climate-related financial risks. At the same time, current disclosures are imprecise, inaccurate, and greenwashing-prone. We introduce a deep learning approach to enable comprehensive climate disclosure analyses by fine-tuning the \climatebert model. From of 14,584 annual reports of the MSCI World index firms from 2010 to 2020, we extract the amount of cheap talk, defined as the share of precise versus imprecise climate commitments. We then test various hypotheses on the drivers of cheap talk. In particular, we ask whether climate initiatives discipline companies in the way they define and disclose actionable climate commitments in their annual reports.

Keywords: Corporate climate disclosures; voluntary reporting; commitments; TCFD recommendations; textual analysis; natural language processing (search for similar items in EconPapers)
JEL-codes: C8 G2 G38 M48 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2022-06
New Economics Papers: this item is included in nep-big, nep-dem, nep-ene and nep-env
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Citations: View citations in EconPapers (2)

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