Explosive financing? Bank share price reactions to carbon bomb exposure
BP2-STS
- Ceresa, Tim ORCID University of Fribourg
- Wallmeier, Martin ORCID University of Fribourg
- 2026
Published in:
- Finance Research Letters. - Elsevier BV. - 2026, vol. 105, p. 110228
Carbon bombs
Sustainable finance
Fossil fuel financing
Bank valuation
Climate finance
Event study
ESG scores
English
On 31 October 2023, a collaboration of international media houses and French non-profit organizations published a report on bank financing of fossil fuel extraction projects representing more than 1 gigaton of CO₂ emissions (“carbon bombs”). In this paper, we examine the value relevance of this information. We find that the market reaction is not explained by the incremental information about carbon bomb financing, but it was primarily influenced by the banks’ ESG scores: the lower the pre-release ESG score, the more negative the market reaction, suggesting that a strong environmental reputation mitigates the negative reaction to the carbon bomb disclosure.
- Faculty
- Faculté des sciences économiques et sociales et du management
- Department
- Département des sciences du Management
- Language
-
- English
- Classification
- Economics
- License
-
CC BY
- Open access status
- hybrid
- Identifiers
-
- DOI 10.1016/j.frl.2026.110228
- ISSN 1544-6123
- Persistent URL
- https://folia.unifr.ch/unifr/documents/335567
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