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The Importance of Climate Risks for Institutional Investors

Author

Listed:
  • Philipp Krueger

    (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute)

  • Zacharias Sautner

    (Frankfurt School of Finance & Management gemeinnützige GmbH; European Corporate Governance Institute (ECGI))

  • Laura T. Starks

    (University of Texas at Austin - Department of Finance)

Abstract

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

Suggested Citation

  • Philipp Krueger & Zacharias Sautner & Laura T. Starks, 2018. "The Importance of Climate Risks for Institutional Investors," Swiss Finance Institute Research Paper Series 18-58, Swiss Finance Institute.
  • Handle: RePEc:chf:rpseri:rp1858
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    Cited by:

    1. Stefano Ramelli & Alexander F. Wagner & Richard J. Zeckhauser & Alexandre Ziegler, 2018. "Investor Rewards to Climate Responsibility: Evidence from the 2016 Climate Policy Shock," NBER Working Papers 25310, National Bureau of Economic Research, Inc.
    2. Miriam Breitenstein & Duc Khuong Nguyen & Thomas Walther, 2019. "Environmental Hazards and Risk Management in the Financial Sector: A Systematic Literature Review," Working Papers on Finance 1910, University of St. Gallen, School of Finance.
    3. Pástor, Luboš & Stambaugh, Robert F. & Taylor, Lucian, 2019. "Sustainable Investing in Equilibrium," CEPR Discussion Papers 14171, C.E.P.R. Discussion Papers.
    4. Chen Lin & Thomas Schmid & Michael S. Weisbach, 2019. "Climate Change, Operating Flexibility and Corporate Investment Decisions," NBER Working Papers 26441, National Bureau of Economic Research, Inc.
    5. Ramelli, Stefano & Wagner, Alexander F. & Zeckhauser, Richard J. & Ziegler, Alexandre, 2018. "Stock Price Rewards to Climate Saints and Sinners: Evidence from the Trump Election," Working Paper Series rwp18-037, Harvard University, John F. Kennedy School of Government.
    6. Gunnar Gutsche & Heike Wetzel & Andreas Ziegler, 2020. "Determinants of individual sustainable investment behavior - A framed field experiment," MAGKS Papers on Economics 202033, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    7. Jean-Stéphane Mésonnier, 2019. "Banks' climate commitments and credit to brown industries: new evidence for France," Working papers 743, Banque de France.
    8. Th'eo Roncalli & Th'eo Le Guenedal & Fr'ed'eric Lepetit & Thierry Roncalli & Takaya Sekine, 2020. "Measuring and Managing Carbon Risk in Investment Portfolios," Papers 2008.13198, arXiv.org.
    9. de Haas, Ralph & Popov, Alexander, 2019. "Finance and Carbon Emissions," CEPR Discussion Papers 14012, C.E.P.R. Discussion Papers.
    10. Julia Anna Bingler & Chiara Colesanti Senni, 2020. "Taming the Green Swan: How to improve climate-related financial risk assessments," CER-ETH Economics working paper series 20/340, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    11. Itzhak Ben-David & Stefanie Kleimeier & Michael Viehs, 2018. "Exporting Pollution: Where Do Multinational Firms Emit CO 2 ?," NBER Working Papers 25063, National Bureau of Economic Research, Inc.
    12. Christina Atanasova & Eduardo S. Schwartz, 2019. "Stranded Fossil Fuel Reserves and Firm Value," NBER Working Papers 26497, National Bureau of Economic Research, Inc.
    13. Caroline Flammer, 2019. "Green Bonds: Effectiveness and Implications for Public Policy," NBER Chapters, in: Environmental and Energy Policy and the Economy, volume 1, pages 95-128, National Bureau of Economic Research, Inc.
    14. Gantchev, Nick & Giannetti, Mariassunta & Li, Rachel, 2019. "Does Money Talk? Market Discipline through Selloffs and Boycotts," CEPR Discussion Papers 14098, C.E.P.R. Discussion Papers.
    15. Caroline Flammer, 2019. "Green Bonds: Effectiveness and Implications for Public Policy," NBER Working Papers 25950, National Bureau of Economic Research, Inc.

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