Do Central Banks Influence Sustainable Investments? An Analysis of Central Bank Speeches on Climate Change in the Euro Area

Abstract

We investigate whether central bank communication on climate change influences the pricing of green bonds in the euro area. Both the intensity and the sentiment of climate-related central bank communication exert a statistically significant impact on green bond valuations. Our findings highlight that the tone and content of central bank communication play a role in shaping the market for sustainable assets and the transmission of climate-related monetary narratives into financial markets.