Climate risk and corporate ESG performance: Evidence from China

This paper has explored whether and how climate risk affects corporate ESG performance in China. Using the text analysis, we construct a firm-level climate risk index and find that climate risk can promote corporate ESG performance. Empirical evidence demonstrates that financing constraints and social attention are the potential influence channels. Furthermore, the positive relationship is more pronounced for firms with greater regional government attention to climate change, better information disclosure quality, or a higher asset-liability ratio. Our results shed light on the important role of climate risk in corporate risk management and investor decisionmaking.