Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/334972 
Year of Publication: 
2025
Series/Report no.: 
ECB Working Paper No. 3087
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Using a novel worldwide dataset of 5,264 syndicated loans issued to 329 firms from 2006 to 2021, we study how climate-related litigation risk affects firm's cost of borrowing. We find robust empirical evidence that firms targeted by climate lawsuits pay significantly higher spreads on their bank loans. These effects are more pronounced for firms with weaker environmental performance and higher ESG controversies. The results suggest that lender's view climate litigation as a material risk factor, which is increasingly priced into debt contracts.
Subjects: 
climate lawsuits
bank loans
loan spreads
litigation risk
JEL: 
G21
G32
Q56
K32
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-7411-0
Document Type: 
Working Paper

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