Do Climate-Related Risks Perception Drive Corporate Green and Low-Carbon Transformation? Evidence from Listed Companies in China

Xuexin Liu, Xinyu Wu and Xiaoxu Kong

Emerging Markets Finance and Trade, 2024, vol. 60, issue 13, 2938-2959

Abstract: The extreme weather and climate occur frequently attracted high attention from society, which brings high uncertainty risks to enterprises. This study uses a fixed effects model to investigate the impact of corporate climate-related risk perceptions on their behavior. We found that increased climate-related risk perception catalyzes corporate green and low-carbon transitions (GLCT). From the perspectives of internal governance and external supervision, it is found that executive risk aversion, government environmental regulation, and investor attention can all contribute to the positive impact of climate-related risk perception on GLCT. Additionally, corporate climate-related risk perceptions can contribute to transition outcomes and lead to favorable capital market responses by improving GLCT actions, and that the contribution of climate-related risk perceptions to GLCT is stronger among non-state-owned enterprises and high-polluting industries. This study provides strategic insights for organizations to effectively manage climate risk.

Date: 2024
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DOI: 10.1080/1540496X.2024.2345190

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