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<p>We study whether the net zero transition (NZT) affects loan pricing in the energy and utilities sectors of the loan market. We find that firms with higher levels of overall NZT disclosure experience a lower cost of debt in the loan market, controlling for loan-specific and firm financial characteristics. This effect is economically and statistically significant in Europe, but not in North America or emerging markets, and becomes more pronounced after the 2015 Paris Agreement. We also identify relevant NZT actions contributing to such a relation. Firms disclosing clear emission reduction targets aligned with the Paris Agreement enjoy lower loan spreads. Additionally, environmental R&amp;D expenditure and improved energy efficiency policies are associated with lower loan spreads. Moreover, effective governance actions, such as environmental management training and ESG-linked executive compensation, help mitigate climate risks and lower loan spreads.</p>

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Corporate Net Zero Transition and Financing Cost: Evidence of Impact from the Global Energy and Utilities Sectors

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年7月20日

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  • Xiao. Y Zhou,
  • Rachel Williams,
  • Gireesh Shrimali

摘要

We study whether the net zero transition (NZT) affects loan pricing in the energy and utilities sectors of the loan market. We find that firms with higher levels of overall NZT disclosure experience a lower cost of debt in the loan market, controlling for loan-specific and firm financial characteristics. This effect is economically and statistically significant in Europe, but not in North America or emerging markets, and becomes more pronounced after the 2015 Paris Agreement. We also identify relevant NZT actions contributing to such a relation. Firms disclosing clear emission reduction targets aligned with the Paris Agreement enjoy lower loan spreads. Additionally, environmental R&D expenditure and improved energy efficiency policies are associated with lower loan spreads. Moreover, effective governance actions, such as environmental management training and ESG-linked executive compensation, help mitigate climate risks and lower loan spreads.