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The city never sleeps: but when will investment banks wake up to the climate crisis?

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journal contribution
posted on 25.11.2021, 11:20 by Theodor F. Cojoianu, Andrea G. F. Hoepner, Fabiola I. Schneider, Michael Urban, Anh Vu, Dariusz Wójcik

Using a global dataset of over 840,000 equity, bond and syndicated loan investment banking deals, we build the fossil fuel investment brokerage profile of financial centres worldwide between 2000 and 2018. We also study whether city-level fossil fuel divestment commitments and country-level green banking policies impact the profile of fossil fuel financial centres over our study timeframe. We find that several financial centres shift their fossil fuel investment brokerage profiles substantially, including the asset classes in which they are active. However, we do not find any evidence that this is driven by city-level divestment commitments. In contrast, we find that fossil fuel investment banking brokers situated in financial centres exposed to voluntary green banking policies reduce their fossil fuel financing. This is driven by foreign brokers whose behaviour appears to signal an anticipation of forthcoming mandatory green finance policies.

Funding

The authors acknowledge that this work was supported by funding from the ClimateWorks Foundation; Science Foundation Ireland [award number 19/FIP/AI/7539]; the International Network for Sustainable Financial Policy Insights, Research, and Exchange (INSPIRE); the Irish Research Council [grant number CLNE/2018/202]; the European Union’s (EU) Horizon 2020 Marie Skłodowska-Curie [grant agreement number 713279 (CLNE/2018/202)]; and the European Research Council (ERC) under the European Union’s Horizon 2020 Research and Innovation Programme [grant number 681337/825215] – CityNet Project and Fintech Project grant No 825215.

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