Understanding climate-related disclosures of UK financial institutions

Climate-related disclosures reduce information asymmetries between firms and investors and help transition to a net zero economy. However, disclosure practices might differ across firms. We explore the determinants of firm disclosures by creating a unique, firm-level panel data set on climate-related disclosures of UK financial institutions. To that end, we apply Natural Language Processing techniques with Machine Learning classifiers on unique textual data which we hand-collected from their published reports. We document differences in disclosure levels across financial institutions with different sizes and over time. We show that climate‑related policy communications in the form of regulatory guidance on future mandatory disclosures is associated with a catch-up by firms previously disclosing less.