Climate Risk and Corporate Performance

Yuheng He () and Yuxing Xiao ()
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Yuheng He: Wuhan University of Technology, School of Management
Yuxing Xiao: Wuhan University of Technology, School of Management

A chapter in Proceedings of the 5th International Conference on Economic Management and Big Data Application (ICEMBDA 2024), 2024, pp 289-299 from Springer

Abstract: Abstract Climate risk has garnered significant attention due to its profound impact on corporate sustainability and financial performance. Climate-related risks, such as environmental regulations, climate change, and extreme weather, present challenges to businesses by increasing operational costs and influencing strategic decisions. This study investigates the relationship between climate risk, especially about transition risk, and corporate performance by analyzing the extent of climate risk disclosure of Chinese A-share listed companies from 2010-2020. Our findings indicate a notable negative correlation between climate risk and corporate performance. Regression analyses confirm that climate risk adversely affects business outcomes, suggesting that higher climate risk diminishes firm value. The results suggest that increased climate risk leads to a decrease in firm value. This study contributes to the growing literature on climate risk by focusing on its effect on non-financial firms, particularly in China’s A-share market. Additionally, it provides practical insights for business leaders and policymakers, highlighting the need for climate risk mitigation strategies to minimize potential value loss. This study serves as a resource for companies seeking to incorporate climate risk considerations into their operations.

Keywords: Climate Risk; Corporate Performance; TobinQ (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-638-3_29

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DOI: 10.2991/978-94-6463-638-3_29

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