September 2025

IZA DP No. 18131: Walking the Talk? Bank Climate Commitments and Green Lending in Emerging Markets

Mariana Bernad, Ralph De Haas, Juan Pablo Rud

We document how banks' voluntary climate commitments predict both their green lending practices and their borrowers' environmental investments. Using structured surveys of 644 bank CEOs and heads of credit across 33 low- and middle-income countries, we develop indices of banks' green management and lending practices. These unique organizational data reveal that banks signing international climate initiatives ('talk') indeed exhibit stronger green practices ('walk') than non-signatories. We then merge our bank data with detailed surveys of 4,719 firms and show that firms borrowing from climate-committed banks are more likely to undertake green investments. Exploiting geocoded bank branch and firm locations, we further find evidence of spatial matching: environmentally-oriented firms preferentially borrow from climate-committed banks in their vicinity. These patterns are consistent with voluntary climate commitments reflecting genuine environmental orientation rather than greenwashing.