Interlinkages between stability, carbon emissions and the ESG disclosures: Global evidence from banking industry

Abstract

The main aim of this paper is to investigate the interlinkages between bank stability, emissions and the ESG activities. The findings can be summarized as follows. First, we find statistically and economically significant association between bank stability and the carbon emissions. Second, banks can partially negate the adverse consequences of emissions through more non-financial (ESG) activities. Moreover, we find lower deposit and lower asset quality to be the main channels through which emissions adversely impact the bank stability. These findings have strong implications for the banking industry as well as the policymakers.