Do banks price environmental risk? Only when local beliefs are binding!

What is the impact on the cost of bank credit of local corporate environmental and biodiversityexposure? At loan origination, banks charge higher rates to firms creating more environmentaldamage, especially when they are lowly capitalized, and when the firms operate in “greener” stateswith lower climate denial and more negative environmental news. Biodiversity risk is also priced,especially when public interest in it intensifies. Following the Trump withdrawal from Paris, banksmodulate their environmental risk pricing in “browner” states. In sum, environmental risk pricingin bank lending is also driven by local beliefs and attitudes.