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Hedge funds and climate news risk: Evidence from stock holdings in fossil fuel firms

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  • Viktoriya Lantushenko
  • Edward Nelling
  • Carolin Schellhorn

Abstract

We examine the role of hedge funds in facilitating the transition to a low‐carbon economy. As highly informed and relatively unregulated investors, hedge funds are in a unique position to recognize and address climate change risks. We analyze hedge fund ownership of fossil fuel firms in response to climate news risk and the related lobbying activities of their portfolio firms. With the rise of the divestment movement after 2013, the hedge fund sector reduced its portfolio commitment to risk‐exposed lobbyists that are slowing progress towards decarbonization. Our results suggest that hedge funds help facilitate the transition to low‐carbon energy sources.

Suggested Citation

  • Viktoriya Lantushenko & Edward Nelling & Carolin Schellhorn, 2026. "Hedge funds and climate news risk: Evidence from stock holdings in fossil fuel firms," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 49(1), pages 69-98, March.
    • Handle: RePEc:bla:jfnres:v:49:y:2026:i:1:p:69-98
    DOI: 10.1111/jfir.12453
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