We construct a novel carbon risk measure to assess mutual funds’ carbon risk exposure based on mutual fund holding data and further explore how such exposure affects mutual funds’ performance, risk, and flows. First, we find carbon risk negatively predicts fund future raw and risk-adjusted...

Through a novel design to link climate risk and the U.S. firm patents related to climate change mitigation technologies (CCMTs), we find that CCMT innovations generate significant economic value and are effective in mitigating firms’ carbon risk, especially when such risk is high and investor...