Climate Risk Disclosure and Institutional Investors

TLDR

The study examines a shock to French institutional investors’ climate risk disclosure demand under Article 173 to demonstrate their influence on firm disclosures. Institutional investors strongly demand climate risk disclosures, actively engage firms, and their climate‑conscious ownership is positively linked to improved firm disclosure. An Internet Appendix is available on the Oxford University Press website alongside the published paper.

Abstract

Abstract Through a survey and analyses of observational data, we provide systematic evidence that institutional investors value and demand climate risk disclosures. The survey reveals the investors have a strong demand for climate risk disclosures, and many actively engage their portfolio firms for improvements. Empirical analyses of holdings data corroborate this evidence by showing a significantly positive association between climate-conscious institutional ownership and better firm-level climate risk disclosure. We establish further evidence of institutional investors’ influence on firms’ climate risk disclosures by examining a shock to the climate risk disclosure demand of French institutional investors (French Article 173). Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.