This paper studies whether and how environmental, social, and governance (ESG) disclosure regulations imposed on banks generate transmission effects along the lending channel. I use a setting of U.S. firms borrowing from non-U.S. banks and exploit the staggered adoption of ESG disclosure regulations in banks’ home countries. I find that exposed borrowers of affected banks improve their environmental and social (E&S) performance following the disclosure mandate. Consistent with banks enhancing both their engagement and selection activities, affected banks impose more environmental action covenants in loan contracts, and they are more likely to terminate a borrower with bad E&S records following the regulation. Further evidence shows that the transmission effects are stronger when a disclosure regulation is well-enforced (as indicated by a greater increase in banks’ disclosure) and among borrowers with greater switching costs. Collectively, the findings document the role of lending relationships in transmitting the real effect of ESG disclosure regulations from banks to borrowing firms.

中文翻译：

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ESG 披露法规通过银行借贷网络的传导效应

本文研究了对银行实施的环境、社会和治理 (ESG) 披露规定是否以及如何在借贷渠道产生传导效应。我使用美国公司从非美国银行借款的设置，并利用银行母国交错采用 ESG 披露法规的情况。我发现受影响银行的风险敞口借款人按照披露要求改善了他们的环境和社会 (E&S) 绩效。与银行加强参与和选择活动相一致，受影响的银行在贷款合同中施加了更多的环境行动契约，并且它们更有可能在监管后终止 E&S 记录不佳的借款人。进一步的证据表明，当信息披露监管得到很好的执行（如银行信息披露的更大增加所表明的那样）并且在转换成本更高的借款人之间时，传导效应会更强。总的来说，调查结果记录了借贷关系在将 ESG 披露法规的实际效果从银行传递给借贷公司方面的作用。