Climate risk and opportunity exposure and firm value: an international investigation

While previous studies mainly focus on the valuation of greenhouse gas (GHG) emissions and climate risk exposure, climate opportunity exposure is less frequently visited in the current literature. We use an international sample from 23 countries that have participated in the CDP. By categorizing climate risks/opportunities into physical, regulatory and other, the study suggests that investors have an asymmetrical valuation for different categories of risks and opportunities. Specifically, investors value climate regulatory risk and other (market-based) climate risks negatively, but not similarly for recognized climate opportunities. Finally, our findings confirm industry matters for investors' valuation decisions by altering their perceptions of the significance of climate risks and opportunities.