Firms and climate change: a review of carbon risk in corporate finance

Firms and climate change: a review of carbon risk in corporate finance Abstract This paper provides an overview of financial economics-based research on carbon risk with an emphasis on corporate finance. In the corporate finance literature, carbon risk refers to the impact of society’s transition to a low-carbon economy on firm value due to tightening regulations, changing consumer preferences, reputational damage, etc. We focus on the links between carbon risk and different firm performance fa...