The Economic Consequences of Climate-Related Risk Disclosure

This research examines the economic consequences of corporate climate risk disclosure among top 200 listed US companies from 2018 to 2020. It revealed that while firms often disclose immediate physical threats from climate events, they under report longer-term transition risks. This oversight is significant as the study shows that transparent climate risk disclosures positively affect firm value, stock liquidity, and analyst forecast accuracy. Such transparency aids the shift to a low-carbon economy and empowers investors, analysts, and policymakers with informed decision-making tools. This underscores the urgent need for mandatory and comprehensive climate risk reporting in the face of global climate challenges.