Work

Climate Risk Disclosure and Corporate Financial Performance: Pathways to Sustainable Value Creation

Year: 2026

Type: article

Abstract: As an integral component of environmental, social, and governance (ESG) reporting, climate risk disclosure (CRD) has received growing attention from firms, investors, and regulators. Using 4501 Chinese A-share listed firms over 2009–2024, this study examines the association between CRD and corporate financial performance using return on assets (ROA) and Tobin’s Q (TQ) as separate accounting- and market-based outcomes. We construct a firm-year CRD index from annual-report text and interpret it as a normalized measure of climate-related disclosure intensity. CRD is positively associated with both ROA and TQ, and the results remain robust across alternative disclosure construction, sample windows, future outcomes, high-dimensional fixed effects, and complementary endogeneity analyses. Pathway tests show that greater CRD is associated with lower financing costs and greater green innovation, both of which are associated with stronger financial outcomes. Institutional ownership and accounting information quality positively moderate the CRD–performance relationship. Heterogeneity analyses indicate stronger associations among non-state-owned and heavily polluting firms, while both physical and transition risk disclosure are positively associated with financial performance. Overall, the findings support a conditional value-relevance interpretation of climate risk disclosure.

Source: Sustainability

DOI: 10.3390/su18178790

Authors: Yong Li, Ziyang Shuang

Institution: University of Science and Technology of China

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Climate action

Open Access status: gold

Estimated APC paid: $2,896