Warning words in a warming world: central bank communication and climate change

Emanuele Campiglio, Jérôme Deyris (), Davide Romelli and Ginevra Scalisi
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Emanuele Campiglio: University of Bologna, Department of Economics, Bologna, Italy, CMCC Foundation - Euro-Mediterranean Center on Climate Change, LSE - London School of Economics and Political Science
Jérôme Deyris: CEE - Centre d'études européennes et de politique comparée (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique
Davide Romelli: Trinity College Dublin
Ginevra Scalisi: SSSUP - Scuola Universitaria Superiore Sant'Anna = Sant'Anna School of Advanced Studies [Pisa]

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Abstract: We study climate-related central bank communication using a novel dataset containing 35,487 speeches delivered by 131 central banks from 1986 to 2023. We employ natural language processing techniques to identify and trace the evolution of key climate-related narratives centred around (i) green finance, and (ii) climate-related financial risks. We find that central bank public communication strategies are primarily driven by underlying institutional factors, rather than exposure to climate-related risks. We then study the impact of climate-related communication on financial market dynamics through both a portfolio and a firm-level analysis. We find that equity returns of ‘green' firms outperform those of ‘dirty' firms when central banks engage more frequently and intensely with climate-related topics.

Keywords: Central banking; Climate change; Low-carbon transition; Central bank communication; Climate-related risks; Green finance; Text analysis; Topic modelling; Asset pricing (search for similar items in EconPapers)
Date: 2025-03-05
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-04978072v1
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