IDEAS home Printed from https://ideas.repec.org/a/eee/riibaf/v76y2025ics027553192500114x.html
   My bibliography  Save this article

Extreme weather and the green transition of energy firms: The moderating effect of digital technology and digital inclusive finance

Author

Listed:
  • Niu, Niu
  • Ma, Junhua
  • Zheng, Deyuan
  • Lu, Yang
  • Zhang, Bin

Abstract

Amid the increasing frequency of extreme weather events, it is crucial to examine their impact on the green transition of Chinese energy systems and the internal mechanisms of this relationship. Drawing upon data from 277 Chinese energy firms listed from 2016 to 2021, this study investigates how extreme weather affects the green transition of the energy firms and investigates the moderating roles of digital technology and digital inclusive finance. Our analysis reveals a negative association between extreme weather and the green transition endeavors of energy firms, a relationship that withstands a battery of robustness checks. A further heterogeneity analysis shows that state-owned firms exhibit a relatively lower susceptibility to the negative impacts of extreme weather, whereas energy firms situated in metropolitan areas display heightened vulnerability. Intriguingly, our findings suggest that extreme weather may serve as a catalyst for the green transition in firms subjected to rigorous audit standards. Additionally, our results highlight that digital technology and digital inclusive finance play crucial moderating roles, both of which can effectively mitigate the negative effects of extreme weather on the green transition of energy firms. In light of these findings, we offer policy recommendations aimed at enabling the energy firms to navigate the green transition effectively amidst the challenges posed by extreme weather.

Suggested Citation

  • Niu, Niu & Ma, Junhua & Zheng, Deyuan & Lu, Yang & Zhang, Bin, 2025. "Extreme weather and the green transition of energy firms: The moderating effect of digital technology and digital inclusive finance," Research in International Business and Finance, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:riibaf:v:76:y:2025:i:c:s027553192500114x
    DOI: 10.1016/j.ribaf.2025.102858
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S027553192500114X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ribaf.2025.102858?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bing Han & Dongmin Kong & Shasha Liu, 2018. "Do Analysts Gain an Informational Advantage by Visiting Listed Companies?," Contemporary Accounting Research, John Wiley & Sons, vol. 35(4), pages 1843-1867, December.
    2. Daron Acemoglu & David Autor & Jonathon Hazell & Pascual Restrepo, 2022. "Artificial Intelligence and Jobs: Evidence from Online Vacancies," Journal of Labor Economics, University of Chicago Press, vol. 40(S1), pages 293-340.
    3. Li, Shuangyan, 2022. "Natural extreme events, government subsidies and corporate environment responsibility: Evidence from China's energy sector," Energy Economics, Elsevier, vol. 114(C).
    4. Chang, Jun-Jie & Mi, Zhifu & Wei, Yi-Ming, 2023. "Temperature and GDP: A review of climate econometrics analysis," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 383-392.
    5. Rameshwar Dubey & David J. Bryde & Cyril Foropon & Manisha Tiwari & Yogesh Dwivedi & Sarah Schiffling, 2021. "An investigation of information alignment and collaboration as complements to supply chain agility in humanitarian supply chain," International Journal of Production Research, Taylor & Francis Journals, vol. 59(5), pages 1586-1605, March.
    6. Guobao Xu & Ellie Broadman & Isabel Dorado-Liñán & Lara Klippel & Matthew Meko & Ulf Büntgen & Tom Mil & Jan Esper & Björn Gunnarson & Claudia Hartl & Paul J. Krusic & Hans W. Linderholm & Fredrik C. , 2024. "Jet stream controls on European climate and agriculture since 1300 ce," Nature, Nature, vol. 634(8034), pages 600-608, October.
    7. Doremus, Jacqueline M. & Jacqz, Irene & Johnston, Sarah, 2022. "Sweating the energy bill: Extreme weather, poor households, and the energy spending gap," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    8. E. Somanathan & Rohini Somanathan & Anant Sudarshan & Meenu Tewari, 2021. "The Impact of Temperature on Productivity and Labor Supply: Evidence from Indian Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 129(6), pages 1797-1827.
    9. Wang, Hongli & Guo, Jinguang, 2024. "New way out of efficiency-equity dilemma: Digital technology empowerment for local government environmental governance," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    10. Jawad M Addoum & David T Ng & Ariel Ortiz-Bobea & Harrison Hong, 2020. "Temperature Shocks and Establishment Sales," The Review of Financial Studies, Society for Financial Studies, vol. 33(3), pages 1331-1366.
    11. Doğan, Buhari & Khalfaoui, Rabeh & Bergougui, Brahim & Ghosh, Sudeshna, 2025. "Unveiling the impact of the digital economy on the interplay of energy transition, environmental transformation, and renewable energy adoption," Research in International Business and Finance, Elsevier, vol. 76(C).
    12. Shahbaz, Muhammad & Siddiqui, Aaliyah & Ahmad, Shabbir & Jiao, Zhilun, 2023. "Financial development as a new determinant of energy diversification: The role of natural capital and structural changes in Australia," Energy Economics, Elsevier, vol. 126(C).
    13. Daron Acemoglu & Pascual Restrepo, 2020. "Robots and Jobs: Evidence from US Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2188-2244.
    14. Yang, Jinglan & Liu, Jianghuai & Yao, Zheng & Ma, Chaoqun, 2024. "Measuring digitalization capabilities using machine learning," Research in International Business and Finance, Elsevier, vol. 70(PB).
    15. Zhang, Zhiyue & Zhang, Wenhao & Wu, Qingyang & Liu, Jiahe & Jiang, Lei, 2024. "Climate Adaptation through Trade: Evidence and Mechanism from Heatwaves on Firms' Imports," China Economic Review, Elsevier, vol. 84(C).
    16. Bu, Ya & Du, Xin & Wang, Yuting & Liu, Shuyu & Tang, Min & Li, Hui, 2024. "Digital inclusive finance: A lever for SME financing?," International Review of Financial Analysis, Elsevier, vol. 93(C).
    17. Yida Sun & Shupeng Zhu & Daoping Wang & Jianping Duan & Hui Lu & Hao Yin & Chang Tan & Lingrui Zhang & Mengzhen Zhao & Wenjia Cai & Yong Wang & Yixin Hu & Shu Tao & Dabo Guan, 2024. "Global supply chains amplify economic costs of future extreme heat risk," Nature, Nature, vol. 627(8005), pages 797-804, March.
    18. Chishti, Muhammad Zubair & Xia, Xiqiang & Dogan, Eyup, 2024. "Understanding the effects of artificial intelligence on energy transition: The moderating role of Paris Agreement," Energy Economics, Elsevier, vol. 131(C).
    19. Lee, Wang-Sheng & Li, Ben G., 2021. "Extreme weather and mortality: Evidence from two millennia of Chinese elites," Journal of Health Economics, Elsevier, vol. 76(C).
    20. Zhang, Qianxiang & Min Du, Anna & Lin, Boqiang, 2025. "Driving total factor productivity: The spillover effect of digitalization in the new energy supply chain," Research in International Business and Finance, Elsevier, vol. 75(C).
    21. Liang, Chen & Zhu, Minghao & Lee, Peter K.C. & Cheng, T.C.E. & Yeung, Andy C.L., 2024. "Combating extreme weather through operations management: Evidence from a natural experiment in China," International Journal of Production Economics, Elsevier, vol. 267(C).
    22. Chenghao Wang & Jiyun Song & Dachuan Shi & Janet L. Reyna & Henry Horsey & Sarah Feron & Yuyu Zhou & Zutao Ouyang & Ying Li & Robert B. Jackson, 2023. "Impacts of climate change, population growth, and power sector decarbonization on urban building energy use," Nature Communications, Nature, vol. 14(1), pages 1-16, December.
    23. Guo, Bingnan & Wang, Yu & Zhang, Hao & Liang, Chunyan & Feng, Yu & Hu, Feng, 2023. "Impact of the digital economy on high-quality urban economic development: Evidence from Chinese cities," Economic Modelling, Elsevier, vol. 120(C).
    24. Ren, Xiaohang & Zhang, Xiao & Yan, Cheng & Gozgor, Giray, 2022. "Climate policy uncertainty and firm-level total factor productivity: Evidence from China," Energy Economics, Elsevier, vol. 113(C).
    25. Shivam Gupta & Sachin Modgil & Ajay Kumar & Uthayasankar Sivarajah & Zahir Irani, 2022. "Artificial intelligence and cloud-based Collaborative Platforms for Managing Disaster, extreme weather and emergency operations," Post-Print hal-04325638, HAL.
    26. Song, Malin & Pan, Heting & Shen, Zhiyang & Tamayo-Verleene, Kristine, 2024. "Assessing the influence of artificial intelligence on the energy efficiency for sustainable ecological products value," Energy Economics, Elsevier, vol. 131(C).
    27. Gupta, Shivam & Modgil, Sachin & Kumar, Ajay & Sivarajah, Uthayasankar & Irani, Zahir, 2022. "Artificial intelligence and cloud-based Collaborative Platforms for Managing Disaster, extreme weather and emergency operations," International Journal of Production Economics, Elsevier, vol. 254(C).
    28. Benincasa, Emanuela & Betz, Frank & Gattini, Luca, 2024. "How do firms cope with losses from extreme weather events?," Journal of Corporate Finance, Elsevier, vol. 84(C).
    29. Chen, Haitao & Zhang, Bin & Liu, Hua & Cao, Jiguo, 2024. "The inequality in household electricity consumption due to temperature change: Data driven analysis with a function-on-function linear model," Energy, Elsevier, vol. 288(C).
    30. Shu, Wenjun & Fan, Di, 2024. "How do firms perceive and react to extreme weather risk in their supply bases?," International Journal of Production Economics, Elsevier, vol. 268(C).
    31. Xue, Mengtian & Zhang, Bin & Chen, Siyuan & Zhao, Yuandong & Wang, Zhaohua, 2024. "How does extreme temperature affect shared travel? Evidence from bike-sharing order flow in China," Journal of Transport Geography, Elsevier, vol. 118(C).
    32. Gao, Zhiyuan & Zhu, Yingnan & Wei, Yihang & Hao, Yu, 2025. "The green circuit: Tracing digital inclusive finance's role in sustainable urban development," Research in International Business and Finance, Elsevier, vol. 76(C).
    33. Song, Malin & Wang, Jianlin & Zhao, Jiajia, 2023. "Effects of rising and extreme temperatures on production factor efficiency: Evidence from China's cities," International Journal of Production Economics, Elsevier, vol. 260(C).
    34. Cao, Cejun & Liu, Yang & Tang, Ou & Gao, Xuehong, 2021. "A fuzzy bi-level optimization model for multi-period post-disaster relief distribution in sustainable humanitarian supply chains," International Journal of Production Economics, Elsevier, vol. 235(C).
    35. Juan P. Montoya-Rincon & Said A. Mejia-Manrique & Shams Azad & Masoud Ghandehari & Eric W. Harmsen & Reza Khanbilvardi & Jorge E. Gonzalez-Cruz, 2023. "A socio-technical approach for the assessment of critical infrastructure system vulnerability in extreme weather events," Nature Energy, Nature, vol. 8(9), pages 1002-1012, September.
    36. Lee, Chien-Chiang & He, Zhi-Wen & Yuan, Zihao, 2023. "A pathway to sustainable development: Digitization and green productivity," Energy Economics, Elsevier, vol. 124(C).
    37. Huang, Chenchen & Min Du, Anna & Lin, Boqiang, 2025. "How does the digital economy affect the green transition: The role of industrial intelligence and E-commerce," Research in International Business and Finance, Elsevier, vol. 73(PA).
    38. Chiang, Thomas C., 2025. "The effect of climate policy uncertainty and induced risks on US aggregate and sectoral stock returns," Research in International Business and Finance, Elsevier, vol. 76(C).
    39. Omrani, Nessrine & Rivieccio, Giorgia & Fiore, Ugo & Schiavone, Francesco & Agreda, Sergio Garcia, 2022. "To trust or not to trust? An assessment of trust in AI-based systems: Concerns, ethics and contexts," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    40. Tone, Kaoru, 2002. "A slacks-based measure of super-efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 143(1), pages 32-41, November.
    41. Cheng, Ruijie & Gupta, Bhavya & Rajan, Ramkishen S., 2023. "Do green financial policies offset the climate transition risk penalty imposed on long-term sovereign bond yields?," Research in International Business and Finance, Elsevier, vol. 65(C).
    42. Yang, Senmiao & Wang, Jianda & Dong, Kangyin & Jiang, Qingzhe, 2023. "A path towards China's energy justice: How does digital technology innovation bring about a just revolution?," Energy Economics, Elsevier, vol. 127(PA).
    43. Wu, Zhiyang & Zhou, Tao & Zhang, Ning & Choi, Yongrok & Kong, Fanbin, 2023. "A hidden risk in climate change: The effect of daily rainfall shocks on industrial activities," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 161-180.
    44. A. T. D. Perera & Vahid M. Nik & Deliang Chen & Jean-Louis Scartezzini & Tianzhen Hong, 2020. "Quantifying the impacts of climate change and extreme climate events on energy systems," Nature Energy, Nature, vol. 5(2), pages 150-159, February.
    45. Tim Loughran & Bill Mcdonald, 2011. "When Is a Liability Not a Liability? Textual Analysis, Dictionaries, and 10‐Ks," Journal of Finance, American Finance Association, vol. 66(1), pages 35-65, February.
    46. Cao, Kaiying & Guo, Qiang & Xu, Yuqiu, 2023. "Information sharing and carbon reduction strategies with extreme weather in the platform economy," International Journal of Production Economics, Elsevier, vol. 255(C).
    47. Addoum, Jawad M. & Ng, David T. & Ortiz-Bobea, Ariel, 2023. "Temperature shocks and industry earnings news," Journal of Financial Economics, Elsevier, vol. 150(1), pages 1-45.
    48. Tone, Kaoru, 2001. "A slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 130(3), pages 498-509, May.
    49. Song, Yanwu & Niu, Niu & Song, Xinyi & Zhang, Bin, 2024. "Decoding the influence of servitization on green transformation in manufacturing firms: The moderating effect of artificial intelligence," Energy Economics, Elsevier, vol. 139(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jiao, Anqi & Lu, Juntai & Ren, Honglin & Wei, Jia, 2024. "The role of AI capabilities in environmental management: Evidence from USA firms," Energy Economics, Elsevier, vol. 134(C).
    2. Agostino, Mariarosaria & Rondinella, Sandro & Ruberto, Sabrina, 2025. "Extreme weather events and efficiency in Italy's food sector: Does institutional quality matter?," Economic Modelling, Elsevier, vol. 146(C).
    3. Chen, Fanglin & Zhang, Jie & Chen, Zhongfei, 2024. "Assessment of the effects of extreme temperature on economic activity," Ecological Economics, Elsevier, vol. 222(C).
    4. Song, Malin & Wang, Jianlin & Zhao, Jiajia, 2023. "Effects of rising and extreme temperatures on production factor efficiency: Evidence from China's cities," International Journal of Production Economics, Elsevier, vol. 260(C).
    5. Liu, Xinheng & Lv, Shumei & Yang, Xin & Cao, Jie & Huang, Chuangxia, 2025. "Extreme temperature shocks and firms’ financial distress," International Review of Economics & Finance, Elsevier, vol. 98(C).
    6. Liang, Chen & Zhu, Minghao & Lee, Peter K.C. & Cheng, T.C.E. & Yeung, Andy C.L., 2024. "Combating extreme weather through operations management: Evidence from a natural experiment in China," International Journal of Production Economics, Elsevier, vol. 267(C).
    7. Yuan, Zhengrong & Ding, Hai & Yu, Qiuzuo, 2024. "High temperature, bargaining power and within-firm wage inequality: Evidence from China," Economic Modelling, Elsevier, vol. 135(C).
    8. Chi, Yeguang & He, Jingbin & Ma, Xinru & Wu, Fei, 2023. "Air pollution and institutional investors' valuation bias during initial public offerings," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    9. Aguilar-Gomez, Sandra & Gutierrez, Emilio & Heres, David & Jaume, David & Tobal, Martin, 2024. "Thermal stress and financial distress: Extreme temperatures and firms’ loan defaults in Mexico," Journal of Development Economics, Elsevier, vol. 168(C).
    10. Zhang, Jing & Li, Meng, 2024. "Compromise or struggle: Extreme temperatures and environmental corporate social responsibility in China," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1872-1894.
    11. Shi, Guanqing & Li, Qiyuan & Wei, Yu & Ali, Madad & Lv, Xinyu, 2024. "Does digital technology advancement promote natural resource utilization efficiency?," Resources Policy, Elsevier, vol. 94(C).
    12. Cang, Han & Li, Chao, 2024. "Corporate climate risk and bond credit spreads," Finance Research Letters, Elsevier, vol. 67(PA).
    13. Leonardo Bortolan & Atreya Dey & Luca Taschini, 2024. "Volatile Temperatures and Their Effects on Equity Returns and Firm Performance," CESifo Working Paper Series 11438, CESifo.
    14. Xiong, Yangchun & Han, Runyue & Ma, Xiaoxuan & Lam, Hugo K.S. & Lyons, Andrew, 2025. "Mitigating the negative financial effects of extreme weather events through supply chain analytics," International Journal of Production Economics, Elsevier, vol. 279(C).
    15. Wang, Hongtian & Shan, Jinghan & Zhang, Xuemei & Nie, Pu-yan & Wang, Chan, 2025. "Labor force allocation changes triggered by extreme heat events—Evidence from China," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 2142-2160.
    16. Bag, Surajit & Rahman, Muhammad Sabbir & Srivastava, Gautam & Giannakis, Mihalis & Foropon, Cyril, 2023. "Data-driven digital transformation and the implications for antifragility in the humanitarian supply chain," International Journal of Production Economics, Elsevier, vol. 266(C).
    17. Bertrand, Jean-Louis & Chabot, Miia & Brusset, Xavier & Courquin, Valentin, 2024. "Identifying assets exposed to physical climate risk: A decision-support methodology," International Journal of Production Economics, Elsevier, vol. 276(C).
    18. Xiaojun Yu & Russell Smyth & Yao Yao & Quanda Zhang, 2024. "Water stress and industrial firm productivity: Evidence from China," Monash Economics Working Papers 2024-20, Monash University, Department of Economics.
    19. Qian, Xianhang & Qiu, Shanyun & Yang, Xue, 2024. "Extreme weather exposure and corporate carbon emissions management: Evidence from forty countries," Journal of Multinational Financial Management, Elsevier, vol. 75(C).
    20. Xu, Ru-Yu & Wang, Ke-Liang & Miao, Zhuang, 2024. "The impact of digital technology innovation on green total-factor energy efficiency in China: Does economic development matter?," Energy Policy, Elsevier, vol. 194(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:riibaf:v:76:y:2025:i:c:s027553192500114x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ribaf .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.