Work

Climate change exposure risk, reserves and stock returns of oil and gas companies

Year: 2025

Type: article

Abstract: This paper examines the joint effects of total proved reserves and climate change exposure on the stock returns of oil and gas companies with a particular focus on their interaction, using firm-level data from 2002 to 2022. Our findings reveal that climate change exposure has a significant positive effect on stock returns, suggesting the presence of a climate risk premium. We also find that the interaction between total proved reserves and exposure to climate regulatory shocks has a significant negative impact on stock returns, indicating that these reserves may be viewed as stranded assets. Finally, we detect that these effects are more pronounced after the Paris Agreement, which can be attributed to heightened levels of climate policy uncertainty following 2016.

Source: Journal of commodity markets

DOI: 10.1016/j.jcomm.2025.100524

Authors: Diana Castro, Juncal Cunado, Juan Equiza-Goñi, Fernando Perez de Gracia

Institutions: Université catholique de lyon, UR CONFLUENCE: Sciences et Humanités, Universidad de Navarra

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: hybrid

Estimated APC paid: $2,910