Climate Adaptation Disclosure: Does it Bring Home the Green?

68 Pages Posted: 4 Jul 2023 Last revised: 12 Mar 2024

See all articles by Alessio Venturini

Alessio Venturini

ICMA Centre, Henley Business School, University of Reading

Alfonso Dufour

ICMA Centre, Henley Business School, University of Reading

Len Shaffrey

University of Reading - Department of Meteorology

Simone Varotto

ICMA Centre - Henley Business School, University of Reading

Date Written: July 3, 2023

Abstract

We examine the impact of climate adaptation disclosure on firm value. Using textual analysis of financial reports issued between 1996 and 2018 by UK listed firms, we demonstrate that the disclosure of material exposure to physical climate risks mitigates the negative effects of natural disasters on firm value. However, we observe that disclosing climate adaptation measures does not have any mitigating effect on firm value. We show that this heterogeneous response to climate-related disclosures arises from their asymmetric effects on investor uncertainty. Our results bear relevant implications for the development of optimal climate disclosure policies.

Keywords: Climate Change, Adaptation, Firm Value, Information Disclosure, Uncertainty

JEL Classification: G1, G12, G14, G28

Suggested Citation

Venturini, Alessio and Dufour, Alfonso and Shaffrey, Len and Varotto, Simone, Climate Adaptation Disclosure: Does it Bring Home the Green? (July 3, 2023). Available at SSRN: https://ssrn.com/abstract=4498261 or http://dx.doi.org/10.2139/ssrn.4498261

Alessio Venturini (Contact Author)

ICMA Centre, Henley Business School, University of Reading ( email )

Greenlands
Reading, Henley on Thames RG6 6AH
United Kingdom

Alfonso Dufour

ICMA Centre, Henley Business School, University of Reading ( email )

Whiteknights Park
P.O. Box 242
Reading RG6 6BA
United Kingdom

Len Shaffrey

University of Reading - Department of Meteorology ( email )

Reading
United Kingdom

Simone Varotto

ICMA Centre - Henley Business School, University of Reading ( email )

Whiteknights Park
P.O. Box 242
Reading RG6 6BA
United Kingdom

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