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The Importance of Climate Risks for Institutional Investors

Author

Listed:
  • Philipp Krueger

    (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute)

  • Zacharias Sautner

    (Frankfurt School of Finance & Management gemeinnützige GmbH; European Corporate Governance Institute (ECGI))

  • Laura T. Starks

    (University of Texas at Austin - Department of Finance)

Abstract

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

Suggested Citation

  • Philipp Krueger & Zacharias Sautner & Laura T. Starks, 2018. "The Importance of Climate Risks for Institutional Investors," Swiss Finance Institute Research Paper Series 18-58, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1858
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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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