Firms sensitive to rising temperatures deliver lower stock returns
Companies that are more sensitive to temperature changes are consistently overvalued and deliver lower-than-expected returns. Global temperature rises as a result of climate change impact firms differently, with sectors such as agriculture and energy directly exposed to physical climate risks, while others face transition risks linked to regulation, supply chains and consumer behaviour. A new study published in Management Science analysed more than five decades of US stock data and introduced a new measure of ‘temperature sensitivity’ to…
