Corporate responses to climate-related risks: From disclosing public stance to aligning investment

The proposed research project will assess the transparency of companies' publicly disclosed stance on climate change, whether it is matched by deployment of concrete measures to manage their exposure to associated risks, and how it affects their financial and operational performance. It will focus on companies in the energy sector, in view of their direct exposure to climate-related risks, given the location-specific, and the infrastructure and emission-intensive nature of their operations. In this context, it will consider the physical risks of climate change, and the risks associated with the transition to a low-emission economic model. Particular attention will be attributed to hard measures, involving investment into certain type of infrastructure and technology. To this end, the research will explore the alignment of corporate capital expenditure (CapEx) with the low-emission, climate-resilient transition, and analyse the importance of climate-related risks in explaining corporate decisions to invest in clean technology and infrastructure and/or divest from carbon-intensive capital.
As one of its central objectives, the research seeks to contribute to the development of the terminology and methodology to allow effective assessment of corporate management of climate-related risks, distinguishing between the measures taken to address physical impacts, and those targeting transition risks. The research will advance inter-disciplinary academic thinking at the interface between climate change policy, environmental economics and business management, exploring whether and how corporate responses to climate change differ from conventional corporate risk management practices.
The research will also inform the public sector on the key areas for improvement to create an enabling policy environment for a timely corporate response to climate-related risks, and on the role of the public sector in supporting the transition. It will further constitute a source of analysis for investors and companies, providing information on how climate change can affect energy companies' risk-return profile."