The question is top of mind as a range of voluntary corporate commitments have come under scrutiny, with some critics dismissing them for promising too little, some for promising too much. Academic researchers Xiaoyan Jiang, Shawn Kim and Shirley Lu find that nearly one-third of corporate emissions targets ending in 2020 “disappeared,” without the company ever disclosing an outcome.[1]

Answers to the question whether corporate sustainability commitments constitute more than what economists might term “cheap talk” are beginning to emerge. For financial institutions, one permutation of voluntary commitments has come in the form of membership in climate alliances. According to research published in May by Matteo Gasparini and Peter Tufano, both of Harvard Business School, membership in such alliances has correlated positively with institutions reducing their own greenhouse gas emissions, adopting environmentally friendly practices and targets, and advocating for policies designed to address climate change.[2]

Their research, which examines evidence from 11 global groups, finds that membership can itself encourage financial firms to boost their climate ambition as they share best practices, while producing no anticompetitive impacts, harm to shareholder returns or pullback in lending to traditional oil and gas companies. The findings parallel those by Viral Acharya, Robert Engle and Olivier Wang of New York University, who show theoretically, with empirical support, that commitments by large institutional investors to influence portfolio companies’ climate strategies lower the cost of decarbonization and reduce transition risk for all companies (including themselves) by spurring adoption of clean technologies while reducing pressure on governments to regulate or tax carbon emissions.[3]

Our own long-running research has shown that sustainability-related practices can produce business benefits, and our latest analysis helps illuminate the link between commitment and practice.[4] The most recent edition of our Transition Finance Tracker, for example, shows that companies with climate targets have so far tended to back their targets with action.

Our latest analysis of banks suggests that their broader sustainability commitments can distinguish them from peers, both in their superior financial characteristics and responsible practices. We based the analysis on a comparison of financial institutions in MSCI’s ESG Ratings coverage that were signatories of the U.N. Principles for Responsible Banking (PRB), a global framework that banks use to accelerate a sustainable economic transition, with their non-signatory counterparts within our coverage, as of June 10, 2025.[5]

PRB signatories, for example, paid one percentage point less, on average, for equity and debt capital than non-signatories over nearly a decade ending March 31, 2025, according to our analysis, which adjusts for differences in country, market capitalization and primary business lines.[6]

The PRB signatories also conduct themselves differently when it comes to factoring environmental and social practices into lending and governance.

• A higher share of PRB signatories have adopted sector-specific credit-risk policies for borrowers in emissions-intensive sectors such as power utilities, oil and gas, and mining. Among PRB signatories we examined, 69% have specific policies for lending to utilities, 61% to mining and 54% for oil and gas.[7] The share of non-signatories with targets for those sectors stood at 24%, 19% and 16%, respectively.

• While PRB signatories and non-signatories lend to small and medium-sized enterprises (SMEs) in roughly similar proportions, SME lending by PRB signatories grew nearly twice as fast year-on-year as SME lending by non-signatories (8.8% versus 4.6%, on average), as of July 25, 2025.[8]
• Directors at 42% of PRB signatories are engaged or actively engaged with climate risk, as measured by their involvement in climate-related risk management or strategy, compared with 14% of directors at non-signatories.[9]
• Two-thirds (66%) of PRB signatories link executive pay to sustainability performance, compared with 42% of non-signatories.[10]
• The overwhelming share (90%) of PRB signatories offer sustainability-related financial products, compared with 44% of non-signatories.[11]
• Sixty-one percent of PRB signatories lead their industry in managing financially material sustainability risks and opportunities, compared with 23% of non-signatories, based on their MSCI ESG Rating.[12]

Similar to how sustainability factors intersect performance more broadly, the impact of making commitments is likely to differ by sector. Recent research by our colleague Xinxin Wang finds intriguing early evidence that bond markets demonstrate considerable nuance when valuing firms’ decarbonization commitments and their ability to execute against them. Across all sectors over the three years ending March 31, 2025, firms with any climate target tend to enjoy lower borrowing costs on average than those without such targets.[13]

Where it gets more nuanced is that borrowing costs differ based on how much companies are on track against their own stated climate targets. For companies in emissions-intensive sectors such as energy and materials, those that are “all on track” toward their climate targets enjoy lower borrowing costs, while their sector counterparts that are only “partially on track” with such targets are penalized.[14] This suggests that for high-emissions industries, markets may see a firm’s progress against decarbonization targets as a sign of execution capability.

But the effects seem to be opposite for other sectors. Companies in low-emissions sectors that are on-track with their climate targets have seen higher borrowing costs, suggesting that lenders are factoring in the costs of decarbonization in the short term. As the paper stresses, “these conclusions are based on less than three years of data on climate-target tracking and should be interpreted as early signals.”

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