Speeches in the Green: The Political Discourse of Green Central Banking

Abstract

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 topics on financial stability, payment innovations, and the banking sector. Price stability concerns play a minor role. 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 prioritize climate research on their agenda: First, peer pressure, measured by membership of a working group on green financing, increases green communication. Second, a high degree of governmental climate engagement, reflected by the extent of national climate laws, is positively related to green communication by central banks. Whether the central bank has an implicit or explicit sustainability mandate, however, does not explain the extent of green communication. Show more