Climate Risk and Green Transformation in Real Estate Sector

Ting Jiang, Kwok Yuen Fan, Eddie ChiMan Hui and Jian Fu Shen

ERES from European Real Estate Society (ERES)

Abstract: This study examines the impact of climate risk on the adoption of green real estate projects and its broader implications by investing the U.S. real estate companies. Drawing on a comprehensive dataset of real estate projects spanning 2000 to 2023, we identify a positive relationship between green project adoption and climate risks. While market reactions to announcements of green projects are generally neutral, firms facing higher climate risk exposure experience significantly greater abnormal returns, suggesting that market participants value such initiatives as strategic responses to firm-level climate risk exposure. Lastly, our findings show that green projects enhance financial performance for firms with greater climate risks, reflected in increased market valuations and operating profitability. However, these projects provide limited environmental impact, with negligible reductions in greenhouse gas emissions intensity and minimal mitigation of reputation incidences, apart from governance incidences. These findings suggest that the financial benefits of green projects depend on firms’ climate risk profiles, but their ability to deliver meaningful environmental outcomes remains constrained.

Keywords: Climate Risk; Corporate Environmental Strategy; Green Projects; Real Estate Investment (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-env and nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2025_139

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