The Importance of Climate Risks for Institutional Investors. (14th February 2020)

• Record Type: Journal Article
• Authors: Krueger, Philipp; Sautner, Zacharias; Starks, Laura T
• Editors: Karolyi, Andrew
• Is Part Of: Review of financial studies. Volume 33:Number 3(2020)
• Page Start: 1067
• Page End: 1111
• Publication Date: 2020-02-14
• Subjects: G11 -- G2 -- G3 -- Q54; Finance -- United States -- Periodicals; Finance -- Periodicals; 332
• DOI: 10.1093/rfs/hhz137
• Languages: English
• ISSNs: 0893-9454

Abstract

Abstract: According to our survey about climate risk perceptions, institutional investors believe climate risks have financial implications for their portfolio firms and that these risks, particularly regulatory risks, already have begun to materialize. Many of the investors, especially the long-term, larger, and ESG-oriented ones, consider risk management and engagement, rather than divestment, to be the better approach for addressing climate risks. Although surveyed investors believe that some equity valuations do not fully reflect climate risks, their perceived overvaluations are not large.