Enterprise's strategies to improve financial capital under a climate change scenario – evidence of the leading country

Climate change poses manifold consequences to the world's ecosystems and human well-being. Greenhouse gas emissions reduction and climate-friendly technological innovations at the corporate level are considered effective measures to mitigate climate change. Using the Bayesian Mindsponge Framework (BMF) to analyze 178 enterprises listed in the Standard and Poor's 500 companies from 2016 to 2021, this paper examines how companies' climate risk-mitigating efforts can affect their market value. We found that emitted carbon dioxide negatively affects the stock price. Meanwhile, companies' income and climate risk-mitigating efforts, including producing eco-friendly products, using renewable energy, and environmental investments, are positively associated with their share value. However, the effects of these efforts are conditional on the companies' income. Based on these findings, we suggest that building an eco-surplus culture among investors and improving their climate change knowledge can be a promising approach to promoting a corporation's mitigation efforts.

Quang-Loc Nguyen, Minh-Hoang Nguyen, Viet-Phuong La, Muhammad Ishaq Bhatti, Vuong Quan Hoang