Climate Adaptation Disclosure: Does it Bring Home the Green?

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: 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