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Industry-level climate policy risk exposure and corporate ESG performance

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  • Sun, Chentong
  • Pan, Chu
  • Xu, Nuo

Abstract

This study employs a time-varying parameter regression with stochastic volatility (TVP-SV) model to creatively measure climate policy risk exposure at the industry level across 31 industrial sectors in China. The results indicate that climate policy risk exposure exhibits dynamic changes and heterogeneity across industries. Using 2009–2023 data from A-share listed companies, we also examined corporate ESG responses to climate policy risk exposure, revealing that increases in exposure significantly enhance ESG performance, with stronger effects observed in the central and western regions and among low-tech, heavily polluting firms.

Suggested Citation

  • Sun, Chentong & Pan, Chu & Xu, Nuo, 2025. "Industry-level climate policy risk exposure and corporate ESG performance," Finance Research Letters, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:finlet:v:81:y:2025:i:c:s1544612325008013
    DOI: 10.1016/j.frl.2025.107542
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    1. Liu, Chengcheng & Zhang, Mingrui & Lin, Yu-En & Li, Qing, 2026. "Brand capital development, climate risk, and corporate investment efficiency," Journal of Business Research, Elsevier, vol. 202(C).

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    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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