Climate Risk Disclosure Quality and Bank Lending Decisions: The Moderating Roles of Bank Green Commitment and Borrower Industry Carbon Intensity

Abstract

Climate risk disclosure has become a central issue in sustainable finance, yet how the financial benefits of disclosure vary across bank types and industries remains poorly understood. This study examines whether higher-quality climate risk disclosure reduces bank borrowing costs, and how this relationship depends on the environmental commitment of the lending bank and the carbon intensity of the borrowing firm's industry. Using 2,847 syndicated loan facilities from 156 banks across 23 countries (2022–2025), hierarchical regression analysis tests four hypotheses involving direct effects and two- and three-way moderating interactions. Results show that better climate disclosure significantly reduces loan spreads (β = −0.184, p < 0.01). This effect is stronger for loans from green-committed banks (β = −0.127, p < 0.01) and for borrowers in carbon-intensive industries (β = 0.156, p < 0.01). The largest spread reductions — up to 141 basis points — occur when environmentally committed banks evaluate high-disclosing borrowers in carbon-intensive industries. Instrumental variable estimation, firm fixed effects, and propensity score matching confirm robustness. Firms in high-emission industries gain most from disclosure quality investments, especially when borrowing from sustainability-oriented banks. Policymakers should target disclosure mandates at carbon-intensive sectors to maximise climate risk pricing in credit markets.