Climate policy uncertainty and corporate environmental risk-taking

Yongwon Kim; Young Kyu Park; Doojin Ryu

doi:10.1016/j.frl.2025.107555

Climate policy uncertainty and corporate environmental risk-taking

Yongwon Kim
, Young Kyu Park
, Doojin Ryu

Department of Economics

University of South Carolina
Sungkyunkwan University

Research output: Contribution to journal › Article › peer-review

12 Scopus citations

Abstract

We examine the impact of climate policy uncertainty (CPU) on corporate environmental risk-taking and stock performance. Environmental incidents, especially those related to climate change, increase following high CPU periods. Furthermore, CPU lowers future stock returns, with a stronger effect following environmental incidents. We underscore the role of CPU in corporate risk-taking on environmental issues, which results in negative stock returns.

Original language	English
Article number	107555
Journal	Finance Research Letters
Volume	82
DOIs	https://doi.org/10.1016/j.frl.2025.107555
State	Published - Sep 2025

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 13 Climate Action

Keywords

Climate change
Climate policy uncertainty
Environment
Stock return

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10.1016/j.frl.2025.107555

Cite this

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title = "Climate policy uncertainty and corporate environmental risk-taking",

abstract = "We examine the impact of climate policy uncertainty (CPU) on corporate environmental risk-taking and stock performance. Environmental incidents, especially those related to climate change, increase following high CPU periods. Furthermore, CPU lowers future stock returns, with a stronger effect following environmental incidents. We underscore the role of CPU in corporate risk-taking on environmental issues, which results in negative stock returns.",

keywords = "Climate change, Climate policy uncertainty, Environment, Stock return",

author = "Yongwon Kim and Park, \{Young Kyu\} and Doojin Ryu",

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AU - Park, Young Kyu

AU - Ryu, Doojin

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N2 - We examine the impact of climate policy uncertainty (CPU) on corporate environmental risk-taking and stock performance. Environmental incidents, especially those related to climate change, increase following high CPU periods. Furthermore, CPU lowers future stock returns, with a stronger effect following environmental incidents. We underscore the role of CPU in corporate risk-taking on environmental issues, which results in negative stock returns.

AB - We examine the impact of climate policy uncertainty (CPU) on corporate environmental risk-taking and stock performance. Environmental incidents, especially those related to climate change, increase following high CPU periods. Furthermore, CPU lowers future stock returns, with a stronger effect following environmental incidents. We underscore the role of CPU in corporate risk-taking on environmental issues, which results in negative stock returns.

KW - Climate change

KW - Climate policy uncertainty

KW - Environment

KW - Stock return

UR - https://www.scopus.com/pages/publications/105005272114

U2 - 10.1016/j.frl.2025.107555

DO - 10.1016/j.frl.2025.107555

M3 - Article

AN - SCOPUS:105005272114

SN - 1544-6123

VL - 82

JO - Finance Research Letters

JF - Finance Research Letters

M1 - 107555

ER -

Climate policy uncertainty and corporate environmental risk-taking

Abstract

UN SDGs

Keywords

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