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Corporate Carbon-Risk and Credit-Risk: The Impact of Carbon-Risk Exposure and Management on Credit Spreads in Different Regulatory Environments

Maurice Dumrose and André Höck

Finance Research Letters, 2023, vol. 51, issue C

Abstract: Global efforts to mitigate climate change can affect a company's business outlook thereby creating risks and opportunities for companies and investors. We investigate the relation between a company's carbon-risk and its credit-risk. Moreover, we highlight the importance of carbon-risk management and the role of the regulatory environment in this context. Using a global sample of corporate bonds, we show that both carbon-risk exposure and carbon-risk management significantly affect credit-risk while the regulatory environment moderates these relations. Our results are relevant for policy makers, investors and companies, especially those with a high carbon-risk exposure.

Keywords: Carbon risk; Credit risk; Climate change; Climate policy (search for similar items in EconPapers)
JEL-codes: G12 G38 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322005918

DOI: 10.1016/j.frl.2022.103414

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