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Does climate risk affect corporate ESG quality?—Evidence from textual analysis

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Listed:
  • Zhao, Zhilong
  • Wang, Shan
  • Wang, Xun
  • Yu, Siming

Abstract

As global warming intensifies, the economic consequences of climate risk have become a central concern for the international community. Using financial data from Chinese A-share listed firms during 2009–2022, this paper investigates the impact of climate risk on corporate ESG quality. We find that higher climate risk significantly improves firms’ ESG quality. Heterogeneity analyses show that this effect is more pronounced for non-state-owned firms, non-high-pollution firms, and firms operating under unstable policy environments. Moreover, the effect becomes stronger following the introduction of major climate policies. Further analyses suggest that climate risk enhances ESG quality through internal green technology innovation and external media supervision. This study enriches the literature on the economic consequences of climate risk and provides practical implications for firms in mitigating and adapting to climate-related challenges.

Suggested Citation

  • Zhao, Zhilong & Wang, Shan & Wang, Xun & Yu, Siming, 2026. "Does climate risk affect corporate ESG quality?—Evidence from textual analysis," Economic Analysis and Policy, Elsevier, vol. 90(C), pages 490-503.
    • Handle: RePEc:eee:ecanpo:v:90:y:2026:i:c:p:490-503
    DOI: 10.1016/j.eap.2026.01.044
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