Climate Risk Exposure and Firms’ Climate Strategies

Xia Li and Caroline Flammer

No 34276, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: When exposed to greater physical and transition climate risks, are firms more likely to engage in climate mitigation, climate adaptation, or/and political strategies? This study examines this question and finds that firms exposed to greater physical and transition climate risks are less likely to undertake substantial mitigation efforts. Instead, they pursue other strategies. Specifically, firms exposed to greater physical climate risks are more inclined to pursue adaptation strategies, while firms facing higher transition climate risks are more likely to engage in anti-climate political strategies (such as lobbying against climate policies). The intensity of how firms manage their climate risks is influenced by their time horizon: the more myopic they are, the less they engage in climate mitigation and the more they oppose climate-friendly policies, thereby decreasing transition risks today while worsening their exposure to future physical and transition climate risks. Overall, this study provides insights into the (lack of) preparedness of the corporate sector for heightened climate risks.

JEL-codes: D72 G34 L21 M14 Q54 Q56 Q58 (search for similar items in EconPapers)
Date: 2025-09
Note: EEE PR
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w34276.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:34276

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34276
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().