Cheap talk and cherry-picking: what ClimateBert has to say on corporate climate risk disclosures

Journal article

Disclosure of climate-related financial risks greatly helps investors assess companies’ preparedness for climate change. Voluntary disclosures such as those based on the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD) are being hailed as an effective measure for better climate risk management. We ask whether this expectation is justified. We do so by training ClimateBERT, a deep neural language model fine-tuned based on the language model BERT. In analyzing the disclosures of TCFD-supporting firms, ClimateBERT comes to the sobering conclusion that the firms’ TCFD support is mostly cheap talk and that firms cherry-pick to report primarily non-material climate risk information.

Authors: Bingler, JA; Kraus, M; Leippold, M; Webersinke, N

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Elsevier
• Journal: Finance Research Letters
• Volume: 47
• Article number: 102776
• Publication date: 2022-03-09
• Acceptance date: 2022-02-25
• DOI: 10.1016/j.frl.2022.102776
• EISSN: 1544-6131
• ISSN: 1544-6123
• Language: English
• Keywords: TCFD recommendations; voluntary reporting; natural language processing; climate-risk disclosure; FFR