This paper examines how the Paris Agreement affected financed emissions of syndicated loan portfolios for 233 banks across 40 countries from 2010–2023. We distinguish between portfolio decarbonization through divestment from high-emitting borrowers and engagement via post-loan origination monitoring. Banks with high pre-Paris exposure to energy-sector lending significantly reduce financed emissions from newly originated
non-relationship loan portfolios by about 20% after Paris. These reductions are concentrated in the energy sector and are driven by decline in the number of new borrowers, and a shift towards lower-emitting new borrowers. We do not find evidence of reductions through post-loan engagement with existing clients.
