Temporal dynamics of firm-specific climate change exposure: A text-based approach

Sirimon Treepongkaruna, Suntharee Lhaopadchan and Pornsit Jiraporn

Research in International Business and Finance, 2025, vol. 77, issue PB

Abstract: We investigate the temporal dynamics of firm-specific climate change exposure using a sophisticated dataset derived from innovative textual analysis of earnings conference calls. Our analysis reveals key trends in corporate climate change exposure. We confirm the rising climate peril hypothesis, showing a 2.85 % annual increase in exposure, after controlling for other factors. Regulatory risk has significantly increased, while physical risk remains stable, suggesting effective mitigation measures. New business opportunities have notably risen, highlighting firms' proactive stance towards sustainability. Our findings also reveal that firms with higher leverage experience a more rapid increase in climate change exposure, whereas firms with greater risk profiles see a slower rise over time. Exploiting a cutting-edge text-based dataset, our study offers valuable insights for policymakers, investors, and corporate leaders, stressing the need for robust risk management and strategic adaptation to address escalating climate-related risks.

Keywords: Climate Change; Corporate Exposure; Regulatory Risk; Financial Leverage; Sustainability Initiatives; Paris Agreement; Text-Based Analysis; Firm Risk Profile; New Business Opportunities (search for similar items in EconPapers)
JEL-codes: G32 M14 Q54 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:77:y:2025:i:pb:s0275531925002296

DOI: 10.1016/j.ribaf.2025.102973

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