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Institutional Investors’ Views and Preferences on Climate Risk Disclosure

Author

Listed:
  • Emirhan Ilhan

    (Frankfurt School of Finance & Management)

  • 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

We survey institutional investors on firms’ climate risk disclosures. Many investors believe climate risk reporting to be as important as traditional financial reporting and that it should be mandatory and more standardized. However, they also view current quantitative and qualitative disclosure on climate risks as being insufficient and imprecise. The belief that current climate-related disclosure is deficient derives more from investors that believe climate risks are underpriced in equity markets. We complement the survey analysis with archival data showing that greater institutional ownership is associated with a higher propensity of firms to voluntarily disclose their carbon emissions.

Suggested Citation

  • Emirhan Ilhan & Philipp Krueger & Zacharias Sautner & Laura T. Starks, 2019. "Institutional Investors’ Views and Preferences on Climate Risk Disclosure," Swiss Finance Institute Research Paper Series 19-66, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1966
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3437178
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    Citations

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    Cited by:

    1. Caroline Flammer & Michael W. Toffel & Kala Viswanathan, 2021. "Shareholder activism and firms' voluntary disclosure of climate change risks," Strategic Management Journal, Wiley Blackwell, vol. 42(10), pages 1850-1879, October.
    2. Zeng, Jing & Zhang, Bingqian & Li, Kevin K., 2024. "The impact of free trade zones on ESG performance: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 1110-1122.
    3. Louis Daumas, 2021. "Should we fear transition risks - A review of the applied literature," Working Papers 2021.05, FAERE - French Association of Environmental and Resource Economists.
    4. Mahfod M. Aldoseri & Maged M. Albaz, 2023. "Climate Change Risks Disclosure: Do Business Strategy and Management Characteristics Matter?," IJFS, MDPI, vol. 11(4), pages 1-14, December.
    5. Alix Auzepy & Christina E. Bannier & Fabio Martin, 2023. "Are sustainability‐linked loans designed to effectively incentivize corporate sustainability? A framework for review," Financial Management, Financial Management Association International, vol. 52(4), pages 643-675, December.
    6. Zirek, Duygu & Unsal, Omer, 2023. "Green bonds: Do investors benefit from third-party certification?," Global Finance Journal, Elsevier, vol. 58(C).
    7. Huang, Qiping & Lin, Meimei, 2022. "Do climate risk beliefs shape corporate social responsibility?," Global Finance Journal, Elsevier, vol. 53(C).
    8. Neil Gunningham, 2020. "A Quiet Revolution: Central Banks, Financial Regulators, and Climate Finance," Sustainability, MDPI, vol. 12(22), pages 1-22, November.
    9. Hirofumi Nishi & S. Drew Peabody, 2024. "Under the spotlight: The peer standard in CSR and the role of public attention," The Financial Review, Eastern Finance Association, vol. 59(2), pages 373-390, May.
    10. Garel, Alexandre & Petit-Romec, Arthur, 2021. "Investor rewards to environmental responsibility: Evidence from the COVID-19 crisis," Journal of Corporate Finance, Elsevier, vol. 68(C).
    11. Alexandre Garel & Arthur Petit-Romec, 2021. "Investor rewards to environmental responsibility: Evidence from the COVID-19 crisis," Post-Print hal-03204216, HAL.
    12. Jerry W. Chen & Eunice S. Khoo & Zihang Peng, 2023. "Climate change disclosure and the information environment in the initial public offering market," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(S1), pages 907-952, April.
    13. Auzepy, Alix & Bannier, Christina E. & Martin, Fabio, 2023. "Walk the talk: Shareholders' soft engagement at annual general meetings," CFS Working Paper Series 689, Center for Financial Studies (CFS).
    14. Daniela Kletzan-Slamanig & Angela Köppl, 2021. "The Evolution of the Green Finance Agenda – Institutional Anchoring and a Survey-based Assessment for Austria," WIFO Working Papers 640, WIFO.

    More about this item

    Keywords

    climate finance; climate risk disclosure; transparency; institutional investors;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • 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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