Economic consequences of climate-related disclosure: a review of the literature

This chapter proposes a literature review on the economic consequences of climate-related disclosures. This field of research is rapidly growing, along with the interest in climate-change information and its role in investors' and other stakeholders' decision-making process. Our research question is formulated as follows: What are the main economic consequences of climate change disclosures? By developing such a review, we contribute to the emerging field of research on climate-related disclosures by shedding light on how market actors incorporate this information in their evaluations. This review allows an understanding of whether and how the provision of information about climate change impacts financial markets by considering the different consequences of this kind of disclosure. In particular, we examine the relationship between climate disclosure and market values, which can either be positive or negative and aims to capture also the direction of the effect of the information disclosed. We also consider the relationship between climate disclosure and information asymmetry and cost of capital to verify whether firm disclosure can improve the information environment regardless of the information conveyed (good or bad). Moreover, the review sheds light on how different institutional factors shape the relationship between climate change information and users’ needs.