Showing off cleaner hands: mandatory climate-related disclosure by financial institutions and the financing of fossil energy

Abstract

We investigate how a French mandatory climate-related disclosure – enacted in 2015 in the run-up to COP 21 – and targeting a subset of institutional investors affected the funding of carbon-intensive industries. The new regulation, unique in Europe at that time, requires insurers, pension funds and asset management firms, but not banks, to report annually on both their climate-related exposure and climate change mitigation policy. We find that investors subject to the new disclosure requirements curtailed their financing of fossil energy companies by some 40% compared to investors in the control group.