Walking the Talk? Bank Climate Commitments and Green Lending in Emerging Markets

Mariana Bernad, Ralph De Haas and Juan Pablo Rud ()
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Mariana Bernad: University of London
Ralph De Haas: EBRD, London
Juan Pablo Rud: Royal Holloway, University of London

No 18131, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We document how banks' voluntary climate commitments predict both their green lending practices and their borrowers' environmental investments. Using structured surveys of 644 bank CEOs and heads of credit across 33 low- and middle-income countries, we develop indices of banks' green management and lending practices. These unique organizational data reveal that banks signing international climate initiatives ('talk') indeed exhibit stronger green practices ('walk') than non-signatories. We then merge our bank data with detailed surveys of 4,719 firms and show that firms borrowing from climate-committed banks are more likely to undertake green investments. Exploiting geocoded bank branch and firm locations, we further find evidence of spatial matching: environmentally-oriented firms preferentially borrow from climate-committed banks in their vicinity. These patterns are consistent with voluntary climate commitments reflecting genuine environmental orientation rather than greenwashing.

Keywords: green management; emerging markets; banks; limate change; greenwashing (search for similar items in EconPapers)
JEL-codes: D22 G21 G32 O12 Q54 Q56 R51 (search for similar items in EconPapers)
Date: 2025-09
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