Navigating climate policy: Corporate lobbying strategies in response to intensified climate risk exposure

This study examines how firms strategically respond to heightened climate risk exposure, with a particular focus on corporate climate lobbying behavior. Our findings reveal a robust positive relation between firm-level climate risk exposure and corporate lobbying efforts on climate-related issues. Among the three climate risk components—regulatory, physical, and opportunity risks—the regulatory risk is the primary driver of the results. Causal relation is established using the U.S. withdrawal from the Paris Agreement in 2017 as a shock to firm climate risk exposure. Finally, we show that corporate climate lobbying reduces regulatory fragmentation and increases firms' greenhouse gas emissions. These results together suggest that firms strategically allocate political resources toward climate-related issues in response to climate risks, aiming to manage their exposures to climate risks.