Climate Change Risk and Financial Market Response: An International Evidence From Performance Forecasts by Financial Analysts

This study examines the effect of climate change exposure on analysts' forecasted stock performance operationalized by their actual recommendations. Our results indicate that firms with higher exposure to climate change receive less favorable recommendations from analysts. This effect is particularly pronounced in carbon-intensive industries and in companies with poor environmental performance. Our results underscore the importance of considering climate change exposure when making investment decisions. By shedding light on the financial consequences of climate exposure, our study contributes to the growing literature on climate finance and offers valuable insights for investors, analysts, and policymakers seeking to assess and mitigate climate-related financial risks.