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Can National ESG Inhibit the Impact of Extreme Climate on Global Financial Risks?

Author

Listed:
  • Haonan Wang
  • Lichao Zhou
  • Jinhui Xu
  • Jingqun Shan

Abstract

This study investigates the impact of extreme climate events on global systemic financial risk, utilizing a dataset of 32 representative economies from 2004 to 2019. By constructing a Climate Risk Index and a systemic financial risk index (RISK), our findings reveal that extreme climate change significantly exacerbates global systemic financial risk. We find this effect to be particularly pronounced in developing countries. Furthermore, our analysis reveals that country‐level ESG performance can effectively mitigate the adverse impact of extreme climate events, with the environmental (E) dimension exhibiting the most prominent moderating effect. We also find that the mitigating efficacy of ESG is conditioned by national cultural values. In addition, this research uncovers a significant synergistic effect between ESG performance and robotics adoption, highlighting a cross‐domain strategic complementarity that plays a crucial role in enhancing the resilience of the financial system.

Suggested Citation

  • Haonan Wang & Lichao Zhou & Jinhui Xu & Jingqun Shan, 2025. "Can National ESG Inhibit the Impact of Extreme Climate on Global Financial Risks?," International Studies of Economics, John Wiley & Sons, vol. 20(4), pages 374-389, December.
    • Handle: RePEc:wly:intsec:v:20:y:2025:i:4:p:374-389
    DOI: 10.1002/ise3.70027
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    References listed on IDEAS

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