Industrial Composition of Syndicated Loans and Banks’ Climate Commitments

In the past two decades, several banks have joined global initiatives aimed at enhancing the disclosure of their asset portfolios and climate commitments. We study whether banks that joined such initiatives have altered the emission exposure of their syndicated loan portfolios. We rely on loan-level data with global coverage combined with country-industry data on emissions. We find that, on average, banks have reduced the emission exposures of their syndicated loan portfolios over the last decade. However, we do not find statistically significant or robust differences between banks that did and those that did not subscribe to climate commitments. In the few instances where we found a statistically significant change after becoming a climate initiative signatory, the effect was either temporary or did not survive our robustness testing. Thus, we conclude that while banks reduced their relative lending to highly-emitting sectors on average, voluntary climate commitments did not contribute to syndicated loan reallocation away from those sectors.