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Climate Change and Corporate Financial Performance

Author

Listed:
  • Lian Liu

    (Faculty of Global Studies, Musashino University, Tokyo 1358181, Japan
    Faculty of International Studies, Meiji Gakuin University, Yokohama 2448539, Japan)

  • John Beirne

    (Asian Development Bank, Metro Manila 1550, Philippines)

  • Dina Azhgaliyeva

    (Asian Development Bank Institute, Tokyo 1006008, Japan)

  • Dil Rahut

    (Asian Development Bank Institute, Tokyo 1006008, Japan)

Abstract

Climate change impacts will continue to worsen with rising greenhouse gas (GHG) emissions, underscoring the growing necessity to foresee and comprehend the impact of climate change risks on economic activity. Using quarterly firm-level data of 209 firms from the People’s Republic of China (PRC) over the period Q1 2018–Q2 2022, this study estimates the impact of firms’ exposure to climate-related risks on their financial performance. The results indicate a notable adverse effect of climate change exposure on firms’ rate of return, with a lag of around two years. Firms located in more climate-vulnerable coastal areas and high-income provinces experience relatively greater negative impacts on their financial returns. Our findings have important policy implications for firms aiming to maximize their returns through enhanced climate change mitigation and adaptation efforts.

Suggested Citation

  • Lian Liu & John Beirne & Dina Azhgaliyeva & Dil Rahut, 2024. "Climate Change and Corporate Financial Performance," JRFM, MDPI, vol. 17(7), pages 1-13, June.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:7:p:267-:d:1423891
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    References listed on IDEAS

    as
    1. Acevedo, Sebastian & Mrkaic, Mico & Novta, Natalija & Pugacheva, Evgenia & Topalova, Petia, 2020. "The Effects of Weather Shocks on Economic Activity: What are the Channels of Impact?," Journal of Macroeconomics, Elsevier, vol. 65(C).
    2. Silvana Secinaro & Valerio Brescia & Davide Calandra & Buerhan Saiti, 2020. "Impact of climate change mitigation policies on corporate financial performance: Evidence‐based on European publicly listed firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2491-2501, November.
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