Industrial Composition of Syndicated Loans and Banks’ Climate Commitments

Galina Hale, Brigid C. Meisenbacher and Fernanda Nechio

No 2024-23, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: In the past two decades, a number of banks joined global initiatives aimed to mitigate climate change by “greening” their asset portfolios. We study whether banks that made such commitments have a different emission exposure of their portfolios of syndicated loans than banks that did not. We rely on loan-level information with global coverage combined with country-industry information on emissions. We find that all banks have reduced their loan-emission exposures over the last 8 years. However, we do not find differences between banks that did and those that did not signal their sustainability goals, with the exception of early signers of Principles of Responsible Investments (PRI), who already had lower exposure to emissions through their syndicated lending. In addition, banks that signed PRI shortened the maturity of the loans extended to highly-emitting industries but only temporarily. Thus, we conclude that banks reduced their exposure to climate transition risks on average, but voluntary climate commitments did not contribute to syndicated loan reallocation away from highly-emitting sectors.

Keywords: climate; sustainable finance; green finance; bank lending; syndicated loans (search for similar items in EconPapers)
JEL-codes: F21 G21 Q54 (search for similar items in EconPapers)
Pages: 37
Date: 2024-07-30
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Industrial Composition of Syndicated Loans and Banks’ Climate Commitments (2024)
Working Paper: Industrial Composition of Syndicated Loans and Banks' Climate Commitments (2024)
Working Paper: Industrial Composition of Syndicated Loans and Banks' Climate Commitments (2024)
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DOI: 10.24148/wp2024-23

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