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Using a credit registry of European banks’ new loan issuance and content analysis on their environmental disclosures, we show that banks that discuss the environment more extensively extend a higher volume of credit to borrowers in brown industries. These results are robust even after controlling for banks’ climate risk discussions and cannot be attributed to the financing of borrowers’ transition towards greener technologies. Examining the mechanisms behind the strategic disclosure choices, we highlight that banks are hesitant to sever ties with existing brown borrowers, particularly when those borrowers exhibit financial underperformance or banks have low capital adequacy.

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