Climate Risk Exposure and Corporate Strategic Dualism: Passive Defensiveness and Active Integration

Deshuai Hou, Zijun Wu and Ying Chen ()
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Deshuai Hou: School of Accounting, Capital University of Economics and Business, No. 121 Zhangjia Road, Huaxiang Fengtai District, Beijing 100070, China
Zijun Wu: School of Accounting, Capital University of Economics and Business, No. 121 Zhangjia Road, Huaxiang Fengtai District, Beijing 100070, China
Ying Chen: School of Accounting, Capital University of Economics and Business, No. 121 Zhangjia Road, Huaxiang Fengtai District, Beijing 100070, China

Sustainability, 2025, vol. 17, issue 13, 1-32

Abstract: The impact of climate risk on corporations is both complex and systemic. This study finds that an increase in climate risk exposure prompts firms to restructure their strategies, primarily leading to a strengthening of their strategic defensiveness and a decline in their strategic aggressiveness. Mechanism analyses reveal that this shift is primarily driven by the intensification of financing constraints, elevated operational risks, and reduced risk-taking capacity associated with increased climatic risk exposure. These effects are especially pronounced in private firms, firms with lower environmental performance, and those undergoing aggressive digital transformation or exhibiting a high degree of internationalization. Further analysis shows that although firms tend to adopt more passive defensive strategies in response to climate risk, they also actively pursue vertically integrated strategies rather than relying on specialization. This study provides new insights into how firms can strategically adapt to the challenges posed by climate risks.

Keywords: climate risk; strategic aggressiveness; strategic defense; supply chain integration (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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