Rationale The 2015 Paris Agreement is a milestone in the global fight against climate change. Against this backdrop, and as a result of credit institutions’ alignment with the agreement, it is important to analyse its impact on lending to firms. Takeaways •The 2015 Paris Agreement represents...

This paper examines whether and to what extent exposure to climate risk affects the deployment of corporate resources to working capital. Using a large sample of listed US firms, we find that exposure to climate risk is negatively associated with working capital. This effect is accentuated in...

This paper investigates the effect of climate risk on systemic financial risks by employing the network approach. Our results demonstrate that climate risk not only affects a single financial market, but also induces risk co-movement, which aggravates potential systemic financial risks. More...

Using a large sample of firms from 45 countries, we find that firms in countries with high climate risk reduce their cash dividends but increasingly use share repurchases to make payouts. The evidence suggests that firms substitute dividends with repurchases to increase their payout flexibility...

We study whether climate risk will affect the stock returns of fossil fuel companies in international markets. Our results show that in the world market, a 1% increase in climate risk will increase the stock returns of fossil fuel companies by 85 BP to 121 BP. We also prove that this climate...

Large emitters reduced their carbon emissions by around 12% after the 2015 Paris Agreement (“the Agreement”) relative to public firms that are less in the limelight. We show that this effect is driven by divestments. Large emitters are 9 p.p. more likely to divest pollutive assets in the...