Staff Working Paper No. 1,017
By Jonathan Acosta-Smith, Benjamin Guin, Mauricio Salgado-Moreno and Quynh-Anh Vo
Climate-related disclosures reduce information asymmetries between firms and investors and help transition to a net-zero economy. However, disclosure practices might differ across firms. We explore the determinants of firm disclosures by creating a unique, firm-level panel data set on climate-related disclosures of UK financial institutions. To that end, we apply Natural Language Processing techniques with Machine Learning classifiers on unique textual data which we hand-collected from their published reports. We document differences in disclosure levels across financial institutions with different sizes and over time. We show that climate-related policy communications in the form of regulatory guidance on future mandatory disclosures is associated with a catch-up by firms previously disclosing less.