Warning words in a warming world: Central bank communication and climate change

We study climate-related central bank communication using a novel dataset containing 32,359 speeches from 131 central banks over the 1986-2021 period. We employ natural language processing techniques to identify three evolving climate-related narratives centred around `sustainable development’, `green finance’ and `climate-related financial risks’. We find central bank public communication strategies to be primarily driven by underlying institutional factors. Finally, we study the impact of communication on equity prices and find that firms characterised by better environmental scores benefit from the more frequent and intense engagement of central banks on climate-related topics.