The Importance of Climate Risks for Institutional Investors

83 Pages Posted: 27 Aug 2018 Last revised: 11 Mar 2020

See all articles by Philipp Krueger

Philipp Krueger

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

Zacharias Sautner

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

Laura T. Starks

University of Texas at Austin - Department of Finance

Date Written: November 11, 2019

Abstract

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

Keywords: Climate Risks, ESG, Institutional Investors

JEL Classification: G11, G3, Q54

Suggested Citation

Krueger, Philipp and Sautner, Zacharias and Starks, Laura T., The Importance of Climate Risks for Institutional Investors (November 11, 2019). Swiss Finance Institute Research Paper No. 18-58, European Corporate Governance Institute - Finance Working Paper No. 610/2019, Available at SSRN: https://ssrn.com/abstract=3235190 or http://dx.doi.org/10.2139/ssrn.3235190

Philipp Krueger

University of Geneva - Geneva Finance Research Institute (GFRI) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, Geneva 1211
Switzerland

Swiss Finance Institute ( email )

Switzerland

Zacharias Sautner (Contact Author)

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Laura T. Starks

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-471-5899 (Phone)
512-471-5073 (Fax)

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