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The Importance of Climate Risks for Institutional Investors

Author

Listed:
  • Philipp Krueger
  • Zacharias Sautner
  • Laura T Starks

Abstract

According to our survey about climate risk perceptions, institutional investors believe climate risks have financial implications for their portfolio firms and that these risks, particularly regulatory risks, already have begun to materialize. Many of the investors, especially the long-term, larger, and ESG-oriented ones, consider risk management and engagement, rather than divestment, to be the better approach for addressing climate risks. Although surveyed investors believe that some equity valuations do not fully reflect climate risks, their perceived overvaluations are not large.

Suggested Citation

  • Philipp Krueger & Zacharias Sautner & Laura T Starks, 2020. "The Importance of Climate Risks for Institutional Investors," Review of Financial Studies, Society for Financial Studies, vol. 33(3), pages 1067-1111.
    • Handle: RePEc:oup:rfinst:v:33:y:2020:i:3:p:1067-1111.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhz137
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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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