Explosive financing? Bank share price reactions to carbon bomb exposure
Abstract
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.
Fields of Study & Subjects
Market Dynamics and Volatility
Global Health Care Issues
Climate Change Policy and Economics
Publication details
- Journal / source
- Finance research letters
- Publisher
- Elsevier BV
- Volume
- 105
- Pages
- 110228–110228
- Publication date
- 25 May 2026
- Language
- EN