Speeches in the green: The political discourse of green central banking

In this paper, we employ a keyword-assisted topic model to quantify the extent of climate-related communication of central banks. We find evidence for a significant increase in climate-related speeches by central banks, which address the topic mostly in parallel with issues related to financial stability, whereas monetary policy and price stability are less emphasized. Finally, we examine factors that can explain the extent of green communication by central banks. Controlling for macroeconomic and climate-related variables, we identify two external factors that can prompt central banks to increase green communication: First, peer pressure, as measured by membership in Network for Greening the Financial System (NGFS), increases green communication. Second, a high degree of governmental climate engagement, reflected by the scope of national climate policies, correlates positively with central banks’ green communication. Whether the central bank has an implicit or explicit sustainability mandate, however, does not explain the extent of green communication.