Warning words in a warming world - central bank communication and climate change

Sep 18, 2026

Uploaded by Finn

The paper examines climate-related communication by central banks using a new dataset of 35,487 speeches delivered by 131 institutions from 1986 to 2023. Natural language processing is applied to track the evolution of climate narratives focused on green finance and climate-related financial risks. Results show communication strategies are mainly shaped by institutional factors rather than direct exposure to such risks. The study further evaluates market effects via portfolio and firm-level analyses, finding ‘green’ firms outperform ‘dirty’ firms when central banks address climate topics more frequently and intensely.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages58

Reading Time2 h 26 min

AccessFree to download

Abstract

Introduction

Warning words in a warming world: central bank communication and climate change Emanuele Campiglio, Jérôme Deyris, Davide Romelli and Ginevra Scalisi January 2025 Grantham Research Institute on Climate Change and the Environment Working Paper No. 418 ISSN 2515-5717 (Online) The Grantham Research Institute on Climate Change and the Environment was established by the London School of Economics and Political Science in 2008 to bring together international expertise on economics, finance, geography, the environment, international development and political economy to create a world-leading centre for policy-relevant research and training. The Institute is funded by the Grantham Foundation for the Protection of the Environment and a number of other sources. It has five broad research areas: 1. Climate change impacts and resilience 2. Cutting emissions 3. Financing a better future 4. Global action 5. Protecting the environment More information about the Grantham Research Institute is [available at:](available at: www.lse.ac.uk/GranthamInstitute)[ www.lse.ac.uk/GranthamInstitute](available at: www.lse.ac.uk/GranthamInstitute) [Suggested citation:](Suggested citation:) Campiglio E, Deyris J, Romelli D and Scalisi G (2025) Warning words in a warming world: central bank communication and climate change . Grantham Research Institute on Climate Change and the Environment Working Paper 418. London: London School of Economics and Political Science Warning words in a warming world: Central bank communication and climate change ∗ Emanuele Campiglioa,b,c , J´erˆome Deyrisd , Davide Romellie , and Ginevra Scalisif a University of Bologna, Department of Economics, Italy bCMCC Foundation - Euro-Mediterranean Center on Climate Change, Italy cLSE Grantham Research Institute on Climate Change and the Environment, United Kingdom d Sciences Po Paris, Centre d’´Etudes Europ´eennes, France e Trinity College Dublin, Ireland eScuola Superiore Sant’Anna, Italy This version: January 2025 Abstract We study climate-related central bank communication using a novel dataset containing 35,487 speeches delivered by 131 central banks from 1986 to 2023 . We employ natural language processing techniques to identify and trace the evolution of key climate-related narratives centred around (i) green finance, and (ii) climate-related financial risks. We find that central bank public communication strategies are primarily driven by underlying institutional factors, rather than exposure to climate-related risks. We then study the impact of climate-related communication on financial market dynamics through both a portfolio and a firm-level analysis. We find that equity returns of ‘green’ firms outperform those of ‘dirty’ firms when central banks engage more frequently and intensely with climate-related topics. Keywords: Central banking; Climate change; Low-carbon transition; Central bank communication; Climate-related risks; Green finance; Text analysis; Topic modelling; Asset pricing. JEL codes: C38, E44, E58, Q54, Z13 . ∗ E-mail addresses: [emanuele.campiglio@unibo.it](emanuele.campiglio@unibo.it), [jerome.deyris@sciencespo.fr](jerome.deyris@sciencespo.fr), [romellid@tcd.ie](romellid@tcd.ie), [ginevra.scalisi@santannapisa.it](ginevra.scalisi@santannapisa.it. Corresponding)[. Corresponding](ginevra.scalisi@santannapisa.it. Corresponding) author: Davide Romelli. We would like to thank Luca De Angelis, Peter Dietsch, Jens van’t Klooster, Fabien Labondance, Emanuel Moench, Matthias Neuenkirch, Mitsuhiro Osada, and Ivan Savin for their insightful comments. We also thank participants at the AERE, CEBRA, ERMASand SASE Conferences, as well as seminar and workshop participants at the Central Bank of Ireland, European Central Bank, CREST, Carlos III Madrid, and the Universities of Alicante, Amiens, Galway, Orl´eans, Paris Nanterre, Poitiers and Wageningen. The research leading to these results has received funding from the

FAQs

What is the core dataset and time span used in the study?

The study uses a novel dataset comprising 35,487 speeches delivered by 131 central banks over the 1986–2023 period.

How are climate-related narratives identified in the speeches?

Natural language processing techniques are used to identify and trace the evolution of key narratives centered on green finance and climate-related financial risks.

What relationship does the paper find between central bank communication and equity performance?

Equity returns of ‘green’ firms outperform those of ‘dirty’ firms when central banks engage more frequently and intensely with climate-related topics.

Sep 18, 2026

Uploaded by Finn