Exploiting a cross-country sample of 3213 firms operating in 28 countries during the period 2002–2020, we find that firm-level climate change exposure is negatively associated to firms’ dividend policy. Based on the precautionary behaviour of firms, we find that stock market volatility and systematic risk are two economic channels explaining the negative effect of climate change risk on dividends. Robust to additional tests and quasi-natural experiments built around three major natural disasters, we confirm that climate change risk directly harms the dividend distribution. Taken together, our evidence suggests that shareholders should consider the dividend reduction potential effect associated with firm-level climate change.
Dividends in the storm: Navigating firm-level climate change risk exposure
Marco Di Antonio;Laura Nieri;
2026-01-01
Abstract
Exploiting a cross-country sample of 3213 firms operating in 28 countries during the period 2002–2020, we find that firm-level climate change exposure is negatively associated to firms’ dividend policy. Based on the precautionary behaviour of firms, we find that stock market volatility and systematic risk are two economic channels explaining the negative effect of climate change risk on dividends. Robust to additional tests and quasi-natural experiments built around three major natural disasters, we confirm that climate change risk directly harms the dividend distribution. Taken together, our evidence suggests that shareholders should consider the dividend reduction potential effect associated with firm-level climate change.
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