Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/331695 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 18131
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
climate change
banks
emerging markets
green management
greenwashing
JEL: 
D22
G21
G32
O12
Q54
Q56
R51
Document Type: 
Working Paper

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