Carbon neutrality:The role of banks in optimal environmental management strategies

Abstract

This study explores the ecological ambitions of banks by studying the coincidence of economic realities with environmental management strategies. We address this question by studying the environmental performance of US banks and its impact on their tail risk as US is not committed to carbon neutrality in COP 21. We proxy economic reality with tail risk of banks and employ a novel extreme value theory to measure this. We use Asset4 ESG data for environmental performance score and test our hypothesis with a sample of 256 US banks. The results indicate that the US banks are ecologically ambitious and their environmental strategies are likely to reduce their tail risk. This provides evidence that better environmental strategies do coincide with the economic realities. We test the consistency of our results by using alternate proxies for tail risk and find our results robust. Our results are also not driven by endogeneity concerns. Finally, our additional results show that the nature of relationship differs with corporate governance levels, CSR committee existence, institutional ownership presence and crisis period.

Publication DOI: https://doi.org/10.1016/j.jenvman.2021.113545
Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences > Aston Business School
Additional Information: © 2021, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Uncontrolled Keywords: Environmental performance,Multivariate extreme value theory,Tail risk,Banks,ESG
Full Text Link:
Related URLs: https://linking ... 301479721016078 (Publisher URL)
PURE Output Type: Article
Published Date: 2021-12-01
Published Online Date: 2021-08-26
Accepted Date: 2021-08-11
Authors: Chaudhry, Sajid M. (ORCID Profile 0000-0001-8769-8920)
Saeed, Asif
Ahmed, Rizwan

Download

[img]

Version: Accepted Version

Access Restriction: Restricted to Repository staff only until 26 August 2022.

License: Creative Commons Attribution Non-commercial No Derivatives


Export / Share Citation


Statistics

Additional statistics for this record