A study from UC Davis is one of the first to examine and quantify the impact of physical climate risk on corporate market values.
Climate change is making business and investors sweat. Research from the University of California, Davis, finds episodes of extremely hot weather lead to declines in market value. This is especially true in the South and Southeast, and for small firms — which lost an average of more than $17 million in the month following the hot weather.
“These findings of a negative market response imply that the equity market recognizes but underprices weather-related climate risk,” said Paul Griffin, an accounting professor at the UC Davis Graduate School of Management.
The study, to be published in the December issue of Weather and Climate Extremes and available online now, is one of the first to examine and quantify the impact of physical climate risk on corporate market values. Griffin will present the work at the Yale Initiative on Sustainable Finance Symposium: State of ESG Investing on Nov. 8.
Griffin teamed up with David Lont from the University of Otago’s School of Business in Dunedin and Martien Lubberink from Victoria University of Wellington’s Business School, both in New Zealand, to conduct the research.
Continue reading at University of California Davis
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