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The impact of climate litigation and activism on stock prices: the case of oil and gas majors

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  • Sascha Kolaric

    (University of Edinburgh Business School)

Abstract

The issue of oil and gas companies’ contribution to climate change gained particular prominence on May 26, 2021. A Dutch court ordered Royal Dutch Shell to significantly reduce its greenhouse gas emissions, while shareholder votes at Exxon Mobile and Chevron succeeded in pushing for further emissions reductions. Together, these events signify a sudden increase in climate litigation and climate activism risk for global oil and gas companies. This study assesses investors' perception of these events by investigating oil and gas companies’ stock price reaction. The results show a significant negative impact on the stock prices for European and North American oil and gas firms, while firms located in other jurisdictions record slight gains. Higher environmental, social, and governance scores appear to mitigate the negative impact on European and North American oil and gas companies, primarily driven through better emissions related measures. The results highlight the adverse effect of increased climate litigation and climate activism risk on firm valuations.

Suggested Citation

  • Sascha Kolaric, 2024. "The impact of climate litigation and activism on stock prices: the case of oil and gas majors," Review of Managerial Science, Springer, vol. 18(11), pages 3141-3172, November.
    • Handle: RePEc:spr:rvmgts:v:18:y:2024:i:11:d:10.1007_s11846-023-00710-4
    DOI: 10.1007/s11846-023-00710-4
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    More about this item

    Keywords

    Climate litigation; Climate activism; ESG ratings; Corporate social responsibility (CSR); Oil and gas companies; Alternative energy companies;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

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