Climate Risk Exposure and Corporate Strategic Dualism: Passive Defensiveness and Active Integration

Abstract

The impact of climate risk on corporations is both complex and systemic. This study finds that an increase in climate risk exposure prompts firms to restructure their strategies, primarily leading to a strengthening of their strategic defensiveness and a decline in their strategic aggressiveness. Mechanism analyses reveal that this shift is primarily driven by the intensification of financing constraints, elevated operational risks, and reduced risk-taking capacity associated with increased climatic risk exposure. These effects are especially pronounced in private firms, firms with lower environmental performance, and those undergoing aggressive digital transformation or exhibiting a high degree of internationalization. Further analysis shows that although firms tend to adopt more passive defensive strategies in response to climate risk, they also actively pursue vertically integrated strategies rather than relying on specialization. This study provides new insights into how firms can strategically adapt to the challenges posed by climate risks.

1. Introduction

With the intensification of global climate change and the increasing frequency of extreme weather events, climate-related risks have become more prominent [1]. In 2022, the World Bank and Global Facility for Disaster Reduction and Recovery estimated that approximately 90% of global disasters were linked to climate change. Climate change not only poses a serious threat to the survival environment and quality of life for all of humanity, but the climate risks it triggers also significantly threaten the stability and security of economic systems [2], slow down economic growth [3], and reduce society’s capacity for sustainable development [4]. Particularly for micro-enterprises, climate risks can severely disrupt their normal business operations [5]. More than 85% of CEOs and CFOs believe that the risks posed by climate change are of moderate to high importance to their businesses. Climate risk also directly leads to a decline in labor productivity, increased operating costs, and reduced total output [6], thereby affecting firms’ economic performance. The uncertainty caused by climate change also limits firms’ ability to understand its impact on both businesses and society. Consequently, if companies fail to proactively implement financial strategic actions, they will face greater risks and costs in the future [7]. However, from a theoretical perspective, although research on climate risks has gradually increased in recent years, the scope of research remains limited. Some studies have examined the negative impacts of extreme weather on ecological environments, socio-economic systems, international trade, and other aspects from a macro level [8,9]. Other studies related to capital markets focus mainly on the impact of specific climate risks (such as abnormal temperatures, carbon emissions, and floods) on the pricing of certain assets (mostly stocks) [10]. However, there is a lack of literature examining how firms respond to the impacts of climate risks from a strategic perspective, as well as the issue of supply chain strategic integration based on this. At the same time, climate risks are complex and systemic, and their impact on corporate strategic behavior remains a subject of theoretical debate. Specifically, climate risks may both prompt firms to take proactive actions, enhancing their strategic aggressiveness, and lead to passive defensive strategies. Therefore, further research in this field is warranted.

Based on the above analysis, this study uses a sample of Chinese A-share listed companies from 2011 to 2022 and constructs a climate risk indicator based on the frequency of climate risk-related terms in the Management Discussion and Analysis (MD&A) section of the annual reports. This study systematically explores the impact of corporate climate risk exposure on strategic positioning and associated supply chain integration issues. The results indicate that the impact of climate change significantly reduces corporate strategic aggressiveness, driving firms to adopt defensive strategies. Path analysis reveals that an increase in climate risk exposure raises firms’ financing constraints and operational risks and reduces their risk-taking capacity, thereby leading to a passive defensive strategic posture. In addition, the heterogeneity analysis shows that this effect is more pronounced in private firms, firms with lower levels of greenness, firms undergoing aggressive digital transformation, and firms with a higher degree of internationalization. Finally, this study finds that although an increase in climate risk exposure intensifies firms’ passive defensive strategic behaviors, firms also proactively develop vertically integrated transformation strategies to better adapt to the impact of climate risks.

The contributions of this study are as follows: First, from the perspective of corporate strategy, it expands the understanding of the overall effects of climate risk exposure on firms and their corresponding response mechanisms. Existing literature has examined the impact of climate risk on economic activities from various perspectives, such as financial pricing [11], product pricing mechanisms [12], and economic security [13]. Additionally, studies have explored the effects of climate risk on corporate behavior in areas such as firm value [14], default risk [15], and debt burden [16]. Given the long-term and systemic impact of climate risk exposure on firms, this study creatively explores how companies can restructure their strategies in response to climate risk issues from a corporate strategy perspective. This addresses the gaps in the existing literature.

Second, it enriches the research on the factors influencing corporate strategic repositioning. The factors influencing corporate strategic choices are highly complex. Existing research primarily focuses on the impacts of economic activities, policy adjustments, social evolution, and corporate culture. However, as climate risk issues become increasingly prominent, there is an urgent need to examine the new impacts and effects of climate risk exposure on corporate strategy from the perspective of climate risks faced by firms. To this end, this study extends the existing academic research in this field.

Third, optimizing strategic arrangements and restructuring strategic positioning are of significant importance for the sustainable development of firms. However, due to the impact of climate risk, corporate strategic uncertainty has significantly increased. In this context, how firms reconstruct their strategic positioning goes beyond the scope of their own operational issues. Therefore, integrating climate risk and corporate strategy into a unified framework for research is of significant theoretical value for optimizing strategic arrangements and restructuring strategic positioning. This not only helps address the operational challenges faced by firms but also contributes to driving their transformational development.

2. Literature Review

2.1. Related Literature on Strategic Aggressiveness

Strategy is a series of actions taken by a firm to allocate its resources in order to establish, maintain, and leverage its core competencies, thereby gaining a competitive advantage in the market [17]. Its core is to clarify the company’s business objectives and, based on these, develop a strategic direction and specific action plans [18]. In the field of strategic management, a firm’s choice of strategic type in response to its environment is often viewed as the outcome of the interaction between its organizational goals and external environment. Miles and Snow (1978) classified corporate strategies into prospector, defender, and analyzer types [19]. The first two correspond to what this study defines as “Active Integration” and “Passive Defensiveness”, forming the theoretical basis for our analysis. Prospector firms typically exhibit high adaptability in dynamic and uncertain environments. Their competitive advantage primarily derives from innovation, market expansion, and proactive responses to new opportunities [20]. Under this strategic logic, environmental changes are regarded as opportunities for development rather than as threats. In contrast, defender firms tend to establish barriers in stable and more predictable niche markets. They maintain their market position through cost control, product standardization and customer relationship management. This strategy involves more concentrated resource allocation, but often results in delayed responses to environmental disturbances and limited adaptability. Therefore, under external environmental shocks, firms are more likely to passively make strategic adjustments to adapt to changes in their external environment. However, persistent passive strategies may lead firms to a competitive disadvantage. On this basis, firms gradually evolve from “Passive Defensiveness” to “Active Integration” to enhance their strategic advantage and adaptability.

Under the framework of resource dependence theory, strategic choice is essentially the process of aligning a firm’s internal characteristics with its external environment. As external conditions and organizational resources change, a firm’s strategic positioning is continuously adjusted. In other words, the factors influencing corporate strategic choices can primarily be explored from two dimensions: internal and external.

From an internal perspective, executives play a crucial role in corporate strategic decision-making because their interests are closely aligned with those of the company. On the one hand, executives may, motivated by the need to rescue the company from difficulties or minimize personal losses, adopt risk-taking strategies that involve a certain level of risk [21]. For example, some executives may adopt risky behaviors, such as implementing strategic innovations, to rescue the company from difficulties and, in turn, change their personal fate [22]. Lian (2015) further discovered that when executives perceive a significant discrepancy between the company’s actual performance and expectations, it motivates them to make riskier strategic decisions [23]. Similarly, Greve (1998) indicated that when executives believe that the firm is in a “loss state”, they are more motivated to initiate strategic changes to reverse the situation [24]. On the other hand, the collective cognitive perspectives of the executive team can significantly influence corporate strategy. Specifically, cognitive perspectives shape thinking patterns, which directly affect strategic choices [25]. Kini and Williams (2012) further pointed out that the motivation for corporate transformation can also be influenced by the disparity in executive compensation [26]. When the compensation gap among executives is relatively small, their motivation to initiate strategic change may weaken.

From an external perspective, the external environment is a critical factor influencing a firm’s choice of appropriate strategy [27]. As firms cannot alter the external environment, they must adjust their strategies to adapt to the current environment and its changes. Zhang et al. (2024) indicate that due to differences in organizational hierarchy and marketization levels, a firm’s strategic aggressiveness may also vary [28]. Massa et al. (2015), starting from changes in the capital market environment, found that short-selling mechanisms can constrain managerial self-interested behaviors through their supervisory effect, thereby promoting relatively conservative strategies [29]. Additionally, the process of strategic positioning also depends on a firm’s ability to access external information and resources, including information about the business environment and competitors [30].

Corporate strategic choices also have significant and complex impacts on supply chain management. As a collaborative network between firms and their suppliers, customers, and other stakeholders in terms of cash flow, information flow, and technology flow [31], the efficiency and degree of coordination of a supply chain are largely influenced by corporate strategic decision-making. The power position of a firm within the supply chain directly impacts its ability to access and allocate key resources. Research shows that when a firm’s strategic aggressiveness is low, it often results in maintaining existing structures and processes, avoiding major adjustments, and lacking the drive to reshape the core elements of the supply chain. This makes it difficult to enhance the resilience and coordination of supply chains. In this scenario, firms may experience a decline in supply chain efficiency in the short term due to internal resistance and resource consumption [32]. In contrast, when a firm is more strategically aggressive, it is more likely to proactively embrace change by introducing information technology, strengthening data integration, and enhancing intelligent management. This improves the transparency and responsiveness of the information flow, enabling the firm to better adapt to market changes [33]. In addition, higher strategic aggressiveness may also be reflected in driving the restructuring of relationships with suppliers and distributors, promoting information sharing and risk sharing among supply chain members, thereby enhancing the overall coordination and adaptability of the supply chain.

2.2. Relevant Literature on Climate Risk

The Task Force on Climate-related Financial Disclosures (TCFD) defines climate risk as the uncertainty arising from climate factors such as extreme weather events, natural disasters, and global warming, as well as the impact on economic and financial activities caused by societal transitions toward sustainable development. Climate change poses a severe threat to ecological environments and the stability of socio-economic systems. Its impacts can propagate and amplify across regions and sectors, making it a quintessential systemic risk [34]. These impacts are transmitted through socio-economic networks, exhibiting distinct cross-sectoral and cross-boundary characteristics, ultimately resulting in cascading risk. For example, water scarcity caused by climate change in one region may propagate along the supply chain, triggering food crises and social issues in distant areas [35]. In addition, climate risks could trigger “green swan” events. Such events cause chain reactions and cascading effects, leading to unpredictable consequences for socio-economic and financial systems [13]. These adverse effects also vary based on heterogeneity between nations and enterprises. In countries with higher resilience, the economic damage caused by climate risks is relatively minor. Conversely, in nations with poor adaptive capacity, the economic losses induced by climate risks are irreparable and permanent [36].

From the perspective of capital markets, there is an ongoing debate about whether the stock market adequately prices climate risks. On one hand, some studies suggest that the market’s understanding and response to climate risks are insufficient, leading to delayed price adjustments. For example, Hong et al. (2019) pointed out that the stock market fails to fully understand climate risk information, leading to significant delays in stock price adjustments [37]. Similarly, Murfin and Spiegel (2020) provide evidence that the market struggles to perceive the threat of rising sea levels, thereby limiting their impact on product market pricing [1]. On the other hand, most studies suggest that the risks associated with climate change and related disasters are already reflected in stock values. For example, Lenfear et al. (2019) found that hurricanes in the United States had a strong abnormal impact on stock returns and liquidity, with major disasters typically leading to negative abnormal returns in the stock market [38]. Bansal et al. (2016) further pointed out that even though the full impact of a global temperature rise may only become apparent in the distant future, the risks associated with temperature fluctuations still have a negative impact on current stock values [39]. Additionally, Berkman et al. (2011) found that natural disasters increase the monthly volatility of stock market returns, and this volatility tends to decrease once the disaster has passed [40]. Bourdeau-Brien et al. (2017) further found that, within a short disaster event period, stock returns typically do not show abnormal fluctuations [41]. However, over a two-to three-month event period, climate disasters significantly affect stock returns. Additionally, the bond market is also affected by climate risks. Klomp (2015) provides evidence that large-scale natural disasters impose significant pressure on public finances, increasing the default risk in sovereign bond markets [42].

From a corporate perspective, the uncertainty surrounding climate change impacts the vulnerability of businesses in several ways. For example, companies face difficulties in effectively analyzing and planning for the potential effects of climate change, which increases their exposure to climate-related risks, affects the value of their assets and investments, and ultimately leads to a significant decrease in corporate value [14]. On one hand, Hallegatte et al. (2011) suggest that climate risks directly affect businesses by damaging production facilities, supply chains, and infrastructure [43]. This disruption impacts business assets, raw material suppliers, manufacturing processes, and operations, thereby directly affecting a company’s survival ability and financial performance. Climate risk can also alter the risk-free interest rate and beta coefficient, increasing the cost of equity capital [44] and raising the likelihood of loan defaults for businesses [1]. At the same time, Banker and Byzalov (2014) found that climate-driven demand uncertainty can have a dual impact on cost structures [45]. Climate change not only increases production costs but also exacerbates the debt cost burden for businesses [1]. On the other hand, climate risks also indirectly affect businesses through factors such as policies, markets, and consumers [46]. These impacts involve environmental regulations, climate policies, stakeholder perspectives, and legal matters. In terms of information disclosure, Vestrelli et al. (2024) point out a nonlinear relationship between climate risk disclosure and corporate value [47]. Specifically, the more climate risk information is disclosed, the higher the value of the company. However, once disclosure exceeds a certain threshold, this relationship may shift to a negative correlation. In other words, excessive disclosure may raise market concerns regarding a company’s ability to manage climate risks, potentially lowering its value. In terms of managerial behavior, Ding et al. (2021) found through a survey of companies in 64 countries that companies operating in countries with frequent extreme weather events are more likely to adopt real earnings management and accrual-based earnings management [48]. In terms of analyst forecasts, Kim et al. (2024) pointed out that in countries heavily affected by climate change (such as Vietnam), analysts’ earnings forecast biases are more significant [49].

Based on the above literature, it can be observed that existing research still largely focuses on the impact of climate change on ecological environments and financial assets. However, theoretical and empirical research on how climate risk influences firms’ internal strategic positioning adjustments, particularly their dynamic choices between strategic aggressiveness and defensiveness, remains limited. Moreover, the impact of climate risk on firms’ supply chain integration has not been systematically examined. Therefore, this study focuses on the effects of climate risk on corporate strategic restructuring, aiming to fill this theoretical and empirical gap and provide new perspectives and empirical evidence for understanding how firms respond to climate change challenges.

3. Theoretical Mechanisms and Research Hypotheses

As climate risk exposure increases, companies face more complex and dynamic environmental challenges in restructuring their strategic positioning.

First, Climate risk may prompt companies to adopt defensive strategies to avoid potential risks, primarily because:

First, due to increased exposure to climate risks, companies face financing constraints, which in turn affect their strategic restructuring. Climate change increases a company’s financial leverage and operating costs [50], especially by exacerbating the uncertainty of energy prices and supply. This uncertainty causes financial unpredictability and increased volatility in capital markets. This raises the debt repayment pressure on businesses, especially when funding is tight or liquidity is insufficient, exacerbating the issue. Market turmoil often leads to an increase in the risk premium in capital markets. Based on the “market timing” theory, when investors have low confidence in future market development, it results in reduced equity financing for businesses [51]. Creditors tend to impose more debt covenants, such as shorter debt maturities and higher debt costs, due to increased external environmental uncertainty [52]. Since firms implementing more aggressive strategic positioning usually require substantial financial support [53], from the perspective of the Resource-Based View, faced with climate-related resource constraints, firms experience difficulties in obtaining funds, leading to a reduction in capital available to support strategic development. Consequently, they are forced to reallocate and protect their key resources and tend to adopt a defensive strategic position.

Secondly, the increase in climate risk exposure raises the complexity of the business environment, intensifies operational fluctuations, and consequently affects the strategic restructuring of the company. In addition, from the perspective of institutional theory, firms face institutional pressures from regulatory agencies and society. To maintain legitimacy and avoid institutional risks, they must allocate more resources to comply with potential environmental regulations or carbon tax policies introduced by the government. For example, firms may need to accelerate equipment upgrades and technological transformations, which will lead to increased compliance costs. For companies with insufficient funds or weaker adaptability, these costs may even threaten their normal operations. Therefore, firms are more likely to reduce their strategic aggressiveness and adopt defensive strategies.

Finally, under the influence of climate risks, companies face higher risk costs, which, in turn, affect their strategic restructuring. Climate change can directly lead to asset losses, operational disruptions, and other issues [54], increasingly impacting business operations. With an increase in risk costs, businesses face greater financial pressure and operational uncertainty [4]. According to prospect theory, when faced with high uncertainty and potential losses, businesses are more likely to reduce their risk exposure to avoid further losses. This psychological mechanism directly influences strategic decisions, prompting businesses to favor defensive strategies in pursuit of higher stability and safety margins.

Based on the above discussion, this paper proposes the following hypothesis:

H1a: 

Ceteris paribus, as exposure to climate risk increases, firms will restructure their strategic positioning, primarily manifesting as a decrease in strategic aggressiveness and an increase in strategic defensiveness.

However, an increase in climate risk exposure may also motivate firms to actively explore new opportunities for low-carbon transformation and adopt more aggressive strategic positioning. The reasons for this are primarily as follows:

First, climate change intensifies market competition, driving firms to restructure their strategies and adopt more aggressive strategic positions. Climate change has fostered the transformation to a low-carbon economy [55], prompting companies to actively seek differentiation strategies in order to secure market positions. For instance, innovations in green technologies and the development of low-carbon products. A more aggressive strategic positioning can drive companies to rapidly enter new market sectors, thereby creating competitive advantages [56]. For example, by increasing investment in research and development, companies can be the first to introduce innovative products that meet environmental standards, thus gaining market share and complying with increasingly stringent environmental regulations.

Secondly, an increased exposure to climate risks drives companies to accelerate the optimization of resource allocation. Climate change can lead to rising resource prices and fluctuations in supply chains, particularly issues related to raw material shortages. In order to maintain competitiveness in an uncertain market environment, companies are forced to choose more efficient but riskier resource allocation strategies. For example, investing in alternative energy or new material research and development. By implementing an expansionary strategy to achieve economies of scale, companies can increase production or integrate upstream and downstream resources. This helps reduce unit costs, enhance resilience, and effectively mitigate the negative impacts of resource shortages and price fluctuations.

Finally, climate change creates potential opportunities, driving companies to increase their strategic aggressiveness. Under the impetus of low-carbon economic transformation, climate change has created numerous emerging markets and business opportunities. Particularly in areas such as new energy, clean technologies, and carbon management, it offers companies abundant market opportunities [57]. For example, continuous innovation in clean energy technologies and the rapid growth of the carbon trading market have created strategic windows for companies to seize market opportunities. In the face of these rapidly developing emerging markets, higher strategic aggressiveness helps companies quickly capture market opportunities and gain a competitive advantage by being the first to enter the market and expand their market share.

Based on the above analysis, this study proposes the following opposing hypotheses:

H1b: 

Ceteris paribus, with an increase in climate risk exposure, the strategic aggressiveness of a company will significantly increase; that is, the company’s strategic offensiveness will enhance.

4. Research Design

4.1. Sample Selection and Data Sources

This paper selects A-share listed companies in China from 2011 to 2022 as the initial research sample and filters the sample based on the following criteria: (1) Due to the particularity of the financial and insurance industry, financial listed companies are excluded; (2) ST and PT companies are excluded due to their greater instability; (3) Samples with severe missing data for relevant variables are excluded; and (4) to reduce the impact of extreme values, this paper applies a trimming treatment to the top and bottom 2% of some continuous variables. The financial and governance data of the companies involved in this study were sourced from the Wind and CSMAR databases.

4.2. Definition of Main Variables

4.2.1. Dependent Variable

Degree of Strategic Aggressiveness (Srta). Referring to the study by Bentley (2013), this paper adopts the following indicators [58]: (1) the ratio of R&D expenditure to operating income to measure the company’s innovation tendency; (2) the ratio of the number of employees to operating income to measure the company’s operational efficiency; (3) the ratio of sales and administrative expenses to operating income to measure the company’s market expansion initiative; (4) the growth rate of operating income to measure the company’s historical growth performance; (5) employee turnover rate to measure organizational stability; and (6) the ratio of fixed assets to total assets to measure capital intensity. The rolling average of the past five years is considered for the first five indicators. Within each industry-year group, the values are assigned scores from 0 to 4 in ascending order. The sixth indicator is scored in reverse. By adding up the scores of these six dimensions for each company-year sample, a strategic aggressiveness score between 0 and 24 is obtained. The higher the score, the more aggressive the company’s strategy; conversely, a lower score indicates a stronger defensive strategy.

4.2.2. Independent Variable

Climate Risk (CRI). Building on Li et al. (2024) [59], this study employs text analysis by combining manual review and machine learning algorithms to identify and measure climate risk terms within the context of Chinese annual reports, thereby constructing a firm-level Climate Risk Indicator (CRI).

First, this study collects the annual financial reports of A-share listed companies from the CNINFO (China Securities Information) website. Then, based on the relevant literature and professional classifications in the China Meteorological Disaster Yearbook, an initial set of terms was compiled. Secondly, machine learning techniques were employed to expand the term set, ultimately establishing a list of 98 climate risk keywords, including terms such as “earthquake”, “typhoon”, “circulation”, “nuclear power”, and “emission reduction”. Drawing on the methodologies of Du et al. (2023) and Hu et al. (2021), the frequency of these keywords appearing in the Management Discussion and Analysis (MD&A) sections of corporate annual reports is used as a proxy for the level of climate risk exposure [44,60]. A higher value of this indicator indicates greater climate risk exposure and a higher likelihood that the firm faces climate-related risks.

4.2.3. Mediating Variable

Financing Constraints (FC). Considering that both the WW index and the SA index are susceptible to endogeneity, this study follows the approach of scholars such as Hadlock and Pierce (2009) and uses a more comprehensive FC index to measure financing constraints [61]. A higher FC index indicates greater financing constraints, meaning that the company faces more severe funding limitations and greater difficulty in obtaining capital.

Operating Risk (Oscore). The O-Score model proposed by Ohlson (1980) is constructed using logistic regression and has been validated with a large amount of corporate data, making it statistically reliable [62]. The model’s variable selection and parameter estimation were empirically tested, providing strong theoretical support for the O-Score. The Oscore is a linear model constructed using both firm-level and public relations indicators to measure operational risk, allowing a more comprehensive assessment of the operational risks faced by the company. Therefore, this study follows the approach of Ohlson (1980) [62] and uses the O-Score model to measure the company’s operating risk. A higher Oscore indicates a more severe operational risk faced by the company [62].

Risk Taking (Risk). Drawing on the research of He (2019) and others [63], this study uses the industry-adjusted standard deviation of ROA to reflect the deviation of a company’s risk level from the industry’s average. It measures both the volatility of profits and the fluctuation level and magnitude of a company’s earnings. The higher the value, the greater the company’s risk-taking level. Conversely, a lower value indicates a lower risk-taking level.

4.2.4. Control Variables

Based on the studies by Hussain et al. (2024) [64], Bu (2024) [65], and others, this paper selects relevant financial and corporate governance indicators as control variables. These include firm size (SIZE), return on assets (ROA), leverage (LEV), return on equity (ROE), receivables ratio (REC), inventory ratio (INV), proportion of independent directors (INDEP), and board size (BOARD). The details of specific variables are shown in

Table 1. Definition of key variables.

Variable Type	Variable Name	Variable Symbol	Variable Description
Dependent Variable	Strategic Aggressiveness	Stra	See variable definitions
Independent Variable	Climate Risk Index	CRI	See variable definitions
Mediating Variable	Financial Constraint	FC	FC Index
	Operating Risk	Oscore	Calculated using the O-Score formula
	Risk-Taking	Risk	Industry-adjusted ROA standard deviation
Control Variables	Firm-Size	SIZE	Natural logarithm of total company assets
	Return on Assets	ROA	Net profit/Total assets
	Leverage	LEV	Total liabilities/Total assets
	Return on Equity	ROE	Net profit/Net assets
	Receivables Ratio	REC	Accounts receivable/Total assets
	Inventory Ratio	INV	Inventory/Total assets
	Independent Directors	INDEP	Number of independent directors/Total number of board members
	Board Size	BOARD	Ln (Number of board members + 1)

.

4.3. Model Design

To verify the research hypotheses mentioned earlier and examine the impact of climate change risk on corporate strategic aggressiveness, this paper constructs the following baseline regression model for empirical testing:

$${Stra}_{i,t}={\alpha }_0+{\alpha }_1{CRI}_{i,t}+{\alpha }_{2}Controls+\sum {Year}_i+\sum {Ind}_i+{\epsilon }_{i,t}$$

(1)

5. Empirical Results Analysis

5.1. Descriptive Statistics

Table 2. Descriptive statistics.

Variable	Mean	p50	SD	Min	Max
Stra	2.404	2.485	0.379	0.000	3.178
CRI	26.61	18.00	28.89	0.000	493.0
SIZE	22.48	22.30	1.268	19.59	26.45
ROA	0.030	0.031	0.079	−2.120	0.786
LEV	0.453	0.451	0.200	0.032	0.908
ROE	0.058	0.066	0.133	−0.926	0.419
REC	0.115	0.092	0.102	0.000	0.506
INV	0.150	0.114	0.139	0.000	0.772
BOARD	2.135	2.197	0.198	1.609	2.708
INDEP	37.55	36.36	5.428	28.57	60.00

presents the descriptive statistics for the main variables. It can be observed that during the sample period, the maximum value of strategic aggressiveness (Stra) is 3.178, the minimum value is 0.000, and the mean value is 2.404, indicating a significant difference in strategic aggressiveness among different enterprises. The maximum value of climate risk (CRI) is 493.0, the minimum value is 0.000, and the average value is 25.35, indicating that there is a large variation in climate risk exposure across enterprises, with different levels of climate risk exposure. The remaining control variables show a good degree of dispersion, which reflects that the sample has good representativeness.

5.2. The Baseline Regression Result

Table 3. The baseline regression.

Variable	(1)	(2)
	Stra	Stra
CRI	−0.119 ***	−0.060 ***
	(−12.14)	(−6.15)
SIZE		−0.051 ***
		(−18.94)
ROA		−0.154 **
		(−2.32)
LEV		−0.154 ***
		(−8.83)
ROE		0.051
		(1.31)
REC		−0.075 **
		(−2.56)
INV		−0.132 ***
		(−5.24)
BOARD		−0.073 ***
		(−4.49)
INDEP		0.000
		(0.08)
_cons	2.437 ***	3.805 ***
	(97.43)	(54.61)
Year	Yes	Yes
Industry	Yes	Yes
N	21,026	21,026
adj. R2	0.009	0.055

Note: This table reports the impact of climate risk exposure on firms’ strategic aggressiveness (Stra). The dependent variable Stra represents the degree of strategic aggressiveness, with higher values indicating greater aggressiveness. The core explanatory variable is the Climate Risk Index (CRI), which measures the level of firms’ exposure to climate risk. Column (1) presents the regression results without the control variables. Column (2) includes firm-specific controls such as firm size (SIZE), return on assets (ROA), leverage ratio (LEV), return on equity (ROE), accounts receivable ratio (REC), inventory ratio (INV), board size (BOARD), and proportion of independent directors (INDEP). All regressions control for industry and year fixed effects, with standard errors clustered at the firm level. The t-statistics are presented in parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1.

reports the baseline regression results, which preliminarily show the impact of increased climate risk exposure on corporate strategic aggressiveness. Columns (1) and (2) represent models without and with control variables, respectively. The coefficient of strategic aggressiveness is significantly negative in both specifications, providing initial support for hypothesis H1a. Moreover, after standardizing the coefficients in Column (2), it is found that a one standard deviation increase in climate risk corresponds to an average decrease of approximately 4.6% in strategic aggressiveness. Considering the long-term and cumulative nature of climate change, this impact is quite substantial. Overall, the empirical results in this section preliminarily indicate that the greater the climate risk exposure faced by firms, the more conservative their strategic choices and the lower their strategic aggressiveness.

5.3. Robustness Check

5.3.1. Instrumental Variable

To address the potential endogeneity between climate risk variables and corporate strategic aggressiveness, this study employs the instrumental variable approach (2SLS) for testing. Provincial CO₂ emissions serve as an important objective indicator of regional climate pressure and are closely related to firms’ climate risk exposure; thus, they meet the relevance requirement. Meanwhile, provincial CO₂ emissions, as a macro-level environmental variable, do not directly affect firms’ strategic aggressiveness and are difficult for individual firms to manipulate, thus satisfying the exogeneity requirement. Therefore, this study selects annual provincial carbon dioxide (CO₂) emissions as the instrumental variable for the climate risk variable. The results in

Table 4. Instrumental variable.

Variable	First Stage	Second Stage
	(1)	(2)
	CRI	Stra
CO2	0.008 ***
	(5.24)
CRI		−1.429 ***
		(−3.08)
SIZE	0.041 ***	−0.008
	(21.71)	(−0.49)
ROA	−0.050	−0.317 ***
	(−1.06)	(−2.64)
LEV	0.070 ***	−0.148 ***
	(5.66)	(−3.94)
ROE	0.068 **	0.029
	(2.45)	(0.42)
REC	0.118 ***	0.054
	(5.72)	(0.82)
INV	−0.139 ***	−0.282 ***
	(−7.82)	(−4.26)
BOARD	−0.005	−0.046 *
	(−0.46)	(−1.96)
INDEP	−0.002 ***	−0.001
	(−4.23)	(−1.15)
_cons	−0.843 ***	3.041 ***
	(−15.86)	(9.81)
Year	Yes	Yes
Industry	Yes	Yes
N	20,828	17,323
Wald F statistic	21.2074

Note: This table presents the results of the instrumental variable (IV) regression using annual provincial CO₂ emissions as the instrument for firms’ climate risk exposure (CRI). Column (1) displays the first-stage regression results, where CO₂ emissions are significantly positively correlated with the CRI, confirming the instrument’s relevance. Column (2) reports the second-stage results, showing a significantly negative impact of the CRI on firms’ strategic aggressiveness (Stra). The first-stage Wald F-statistic indicates that the instrument passed the weak instrument test. All regressions control for firm-level characteristics (SIZE, ROA, LEV, ROE, REC, INV, BOARD, INDEP) as well as year and industry fixed effects. Robust standard errors clustered at the firm level. The t-statistics are reported in parentheses.* p < 0.10, ** p < 0.05, *** p < 0.01.

indicate that the Wald F-statistic confirms that the instrumental variable passes the weak instrument test. As shown in Column (1) of Table 4, annual provincial carbon dioxide (CO₂) emissions are significantly positively correlated with climate risk, confirming the strong explanatory power of the instrumental variable. Column (2) shows that the second-stage regression coefficients are all significantly negative, indicating that climate risk significantly reduces corporate strategic aggressiveness, thus supporting Hypothesis H1a.

5.3.2. PSM

In order to mitigate issues of sample self-selection and sample distribution imbalance, this study employs the Propensity Score Matching (PSM) method. The matching is based on control variables using a 1:1 nearest-neighbor matching approach. After conducting balance tests, Model (1) is re-estimated using the matching results. The regression results, shown in column (1) of

Table 5. Robustness check.

Variable	(1)	(2)	(3)	(4)
	Stra	Stra	Stra-Defense	Stra
D_CRI	−0.029 ***
	(−5.05)
Nbqhr		−23.551 ***
		(−12.56)
CRI			0.030 ***	−0.064 ***
			(4.11)	(−6.43)
SIZE	−0.051 ***	−0.049 ***	0.017 ***	−0.053 ***
	(−16.94)	(−18.17)	(8.14)	(−18.86)
ROA	−0.351 ***	−0.152 **	0.017	−0.157 **
	(−3.72)	(−2.30)	(0.34)	(−2.30)
LEV	−0.177 ***	−0.142 ***	0.049 ***	−0.163 ***
	(−8.71)	(−8.13)	(3.69)	(−9.08)
ROE	0.151 ***	0.053	−0.013	0.068 *
	(3.05)	(1.36)	(−0.45)	(1.70)
REC	−0.103 ***	−0.080 ***	−0.016	−0.051 *
	(−3.14)	(−2.75)	(−0.72)	(−1.71)
INV	−0.162 ***	−0.147 ***	0.024	−0.126 ***
	(−5.58)	(−5.85)	(1.24)	(−4.90)
BOARD	−0.078 ***	−0.072 ***	0.018	−0.076 ***
	(−4.26)	(−4.44)	(1.47)	(−4.57)
INDEP	−0.000	−0.000	−0.001	0.000
	(−0.20)	(−0.25)	(−1.25)	(0.07)
TAX				0.149 *
				(1.68)
BUSENV				−0.217 ***
				(−9.28)
GDPRATE				0.126
				(1.13)
_cons	3.888 ***	3.771 ***	−0.328 ***	4.449 ***
	(49.56)	(54.34)	(−6.22)	(42.79)
Year	Yes	Yes	Yes	Yes
Industry	Yes	Yes	Yes	Yes
N	16,552	21,026	21,026	20,148
adj. R2	0.056	0.060	0.017	0.060

Note: This table presents a series of robustness checks to verify the impact of climate risk on firms’ strategic choices. Column (1) employs propensity score matching (PSM) to estimate the effect of the climate risk dummy variable (D_CRI) on strategic aggressiveness (Stra), with a significantly negative result. Column (2) introduces the proportion of climate risk-related keyword frequency in annual reports (Nbqhr), and the effect remains significant. Column (3) replaces the dependent variable with “strategic defensiveness”, showing a significant positive effect of the Climate Risk Index (CRI) on defensive strategy. Column (4) adds additional controls, including tax burden (TAX), business environment (BUSENV), and regional GDP growth rate (GDPRATE), to the baseline model, with robust results. All regressions control for industry and year fixed effects, with standard errors clustered at the firm level. The t-statistics are reported in parentheses.*** p < 0.01, ** p < 0.05, * p < 0.1.

, are consistent with hypothesis H1a, confirming the robustness and reliability of hypothesis H1a.

5.3.3. Replace the Core Variables

To further enhance the reliability of the results, this study references Du et al. (2023) and uses the frequency ratio of climate risk-related terms in the annual report (Nbqhr) as an alternative variable for the dependent variable [44]. The results are presented in column (2) of Table 5. It can be observed that after changing the measurement method for climate risk, the results remain unchanged, confirming the robustness of the hypothesis H1a results.

Based on the classification of corporate strategies by Miles and Snow (1978) and other scholars, this study replaces the dependent variable with a strategic defense-type dummy variable [19]. If a company’s strategy is defensive, this variable takes the value of 1; otherwise, it is 0. The results are reported in Column (3) of Table 5. The results indicate a positive correlation between climate risk and this dummy variable, suggesting that the greater the climate risk, the higher the defensive attribute of the corporate strategy and the lower its strategic aggressiveness. The results of this study are still valid.

5.3.4. Add Control Variables

Based on the original control variables, this study further includes provincial-level control variables to capture the potential impact of regional economic and policy differences on corporate strategic performance. These include the provincial tax burden level (TAX), business environment (BUSENV), and GDP growth rate (GDPRATE). The regression results are shown in Column (4) of Table 5, and the results remain unchanged, confirming the robustness of this study’s findings.

6. Mechanism Test

Based on previous theoretical analyses, climate risk can restrict firms’ access to external financing, increase financial uncertainty, and impose higher risk costs, thereby reducing strategic aggressiveness and accelerating strategic restructuring. To test this mechanism, this study uses financing constraint level, operational risk level, and corporate risk-taking capacity as mediating variables and conducts a three-step mediation test by establishing the following models:

$${Med}_{i,t}={\beta }_0+{\beta }_1{CRI}_{i,t}+{\beta }_2{Controls}_{i,t}+\sum {Year}_i+\sum {Ind}_i+{\epsilon }_{i,t}$$

(2)

$${Stra}_{i,t}={\gamma }_0+{\gamma }_1{CRI}_{i,t}+{\gamma }_2{Med}_{i,t}+{\gamma }_{3}Controls+\sum {Year}_i+\sum {Ind}_i+{\epsilon }_{i,t}$$

(3)

Among them, Med represents the mediating variable. In this paper, the mediating variables are financing constraints, operational risk, and corporate risk-taking level. These variables are respectively substituted for Med in Equations (2) and (3), and stepwise regression is performed while controlling for the control variables.

6.1. Financing Constraints: Climate Risk Exacerbates the Difficulty for Enterprises to Obtain Funds

Financing constraints are a common challenge that enterprises face in their daily operations [66] and are one of the key factors limiting business operations and development [67]. When a company faces significant external market volatility, creditors perceive a higher risk of default, leading to an increase in the company’s borrowing costs. Due to the increased uncertainty caused by climate change, the potential risks faced by companies are also rising. On the one hand, pessimistic projections about market prospects lead investors and creditors to reduce their willingness to invest in the company [68]. Creditors may increase interest rates or reduce loan amounts to mitigate the potential losses caused by uncertainty [69]. This issue is particularly prominent in companies with high carbon emissions or severe environmental pollution. On the other hand, if a company is located in climate-sensitive industries such as energy, transportation, or agriculture, and fails to effectively mitigate climate risks or adopt adaptive measures, banks and financial institutions may limit its loan amount or tighten loan conditions. The increase in costs and the reduction in available channels for external funding will result in a decrease in the external capital accessible to the company, making its capital expenditure more expensive. The high cost of financing limits a company’s investment decisions in high-return projects, thereby enhancing its strategic defensiveness and reducing its level of strategic aggressiveness.

Table 6. Mechanism test: Increased financing constraints.

Variable	(1)	(2)
	FC	Stra
CRI	0.014 ***	−0.058 ***
	(4.31)	(−5.91)
FC		−0.049 **
		(−2.36)
SIZE	−0.145 ***	−0.058 ***
	(−158.54)	(−14.27)
ROA	0.082 ***	−0.150 **
	(3.71)	(−2.25)
LEV	−0.449 ***	−0.176 ***
	(−76.59)	(−8.81)
ROE	0.077 ***	0.057
	(5.86)	(1.45)
REC	0.253 ***	−0.052 *
	(25.79)	(−1.73)
INV	0.203 ***	−0.121 ***
	(24.00)	(−4.70)
BOARD	0.005	−0.073 ***
	(0.90)	(−4.45)
INDEP	0.001 ***	0.000
	(3.49)	(0.10)
_cons	3.651 ***	3.976 ***
	(156.47)	(38.34)
Year	Yes	Yes
Industry	Yes	Yes
N	20,699	20,699
adj. R2	0.790	0.055
Sobel	p = 0.039	Z = −2.069

Note: This table presents the empirical test of the mechanism linking climate risk, financing constraints, and strategic positioning. Column (1) shows the significant positive effect of the Climate Risk Index (CRI) on financing constraints (FC), indicating that increased climate risk exacerbates firms’ financing difficulties. Column (2) reports the effect of the CRI on strategic aggressiveness (Stra), controlling for financing constraints, where the negative coefficient remains significant, suggesting a partial mediating role for financing constraints. Both regressions include year and industry fixed effects, with standard errors clustered at the firm level. The Sobel test confirms the significance of the mediation effect (p = 0.039). The t-statistics are in parentheses.*** p < 0.01, ** p < 0.05, * p < 0.1.

reports the results of the mechanism test based on the “climate risk-financing constraint-strategic aggressiveness” framework. In column (1) of Table 6, the regression coefficient of climate risk (CRI) is significantly positive. This indicates that an increase in climate risk exposure intensifies the financing constraints faced by the firm. Column (2) presents the regression results with both climate risk (CRI) and financing constraints (FC) controlled for. The coefficient of climate risk (CRI) is significantly negative, suggesting the presence of a partial mediating effect. A higher climate shock leads to increased financing constraints, which, in turn, lowers the firm’s strategic aggressiveness.

6.2. Operational Risk: Climate Risk Increases Business Uncertainty

Business operational risk refers to the increased uncertainty faced by enterprises due to changes in the external environment, including rising costs, revenue fluctuations, and increased financial management pressures. Climate risk, as a key factor, significantly affects the level of operational risk faced by businesses.

On the one hand, climate risk directly increases the uncertainty of business operational costs. Extreme weather events may lead to damage to production facilities [43], operational interruptions, and logistics transportation delays [5]. These unexpected events force companies to invest additional funds to repair infrastructure, accelerate production recovery, and ensure product delivery. At the same time, with the potential implementation of stricter environmental policies by governments and regulatory bodies, such as carbon taxes and emission limits [46], businesses will face increased compliance costs, further intensifying their operational burdens. In addition, the energy and raw material markets may experience price fluctuations due to changes in supply and demand, increasing the business’s exposure to risk [1]. On the other hand, climate risk also increases the pressure on a company’s financial department regarding budgeting, planning, and forecasting. The frequency and impact of extreme weather events are difficult to quantify, requiring companies to frequently adjust their budgets to cope with unexpected circumstances. However, traditional annual budgeting processes often cannot respond quickly to dynamic changes. These challenges increase the difficulty of developing long-term financial plans, potentially leading to delayed capital allocation or resource wastage. Therefore, this paper argues that climate risk increases operational cost uncertainty and the complexity of financial management, thereby increasing the level of business risk. This increased risk further suppresses a company’s strategic aggressiveness, prompting the firm to adopt a defensive strategy.

Table 7. Mechanism test: Increasing operational risks.

Variable	(1)	(2)
	OScore	Stra
CRI	0.150 ***	−0.062 ***
	(4.84)	(−6.28)
OScore		0.009 ***
		(3.95)
SIZE	−0.443 ***	−0.048 ***
	(−51.50)	(−16.53)
ROA	−14.097 ***	−0.032
	(−67.12)	(−0.44)
LEV	8.495 ***	−0.227 ***
	(153.93)	(−8.93)
ROE	1.244 ***	0.041
	(10.06)	(1.04)
REC	0.009	−0.075 **
	(0.10)	(−2.56)
INV	−0.087	−0.132 ***
	(−1.09)	(−5.22)
BOARD	0.115 **	−0.074 ***
	(2.24)	(−4.55)
INDEP	0.005 **	0.000
	(2.52)	(0.01)
_cons	−2.281 ***	3.825 ***
	(−10.34)	(54.77)
Year	Yes	Yes
Industry	Yes	Yes
N	21,026	21,026
adj. R2	0.754	0.056
Sobel	p = 0.039	Z = −2.069

Note: This table tests the mediation mechanism of “climate risk—operational risk—strategic aggressiveness”. Column (1) shows a significant positive effect of the Climate Risk Index (CRI) on operational risk (OScore), indicating that increased climate risk elevates firms’ operational risks. Column (2) controls for operational risk and finds that the negative effect of CRI on strategic aggressiveness (Stra) remains significant, suggesting a partial mediating role of operational risk. Both regressions include industry and year fixed effects, with standard errors clustered at the firm level. The Sobel test confirms the significance of the mediation effect (p = 0.039). The t-statistics are in parentheses.*** p < 0.01, ** p < 0.05, * p < 0.1.

reports the results of the mechanism test based on “climate risk-operational risk-strategic aggressiveness.” Building on the empirical results of Hypothesis 1, Column (1) in Table 7 shows that the regression coefficient of climate risk (CRI) is significantly positive, indicating that climate risk significantly increases a company’s operational risk. Column (2) reports the regression results with both climate risk (CRI) and operational risk (Oscore) controlled. The coefficient of climate risk (CRI) is significantly negative, suggesting the presence of partial mediation. Higher climate shocks can increase operational risk, thereby reducing a company’s strategic aggressiveness.

6.3. Risk-Taking: Climate Risk Reduces the Risk Preference of Enterprises

The level of corporate risk-taking reflects management’s willingness to pay for high-return projects and their inclination toward risk. A higher level of risk-taking is often closely related to a company’s willingness to explore emerging markets, drive technological innovation, and engage in strategic expansion [70,71]. Climate risk, as a systemic risk, has characteristics such as being cross-industry, cross-regional, long-term, and irreversible [36], which profoundly impact a company’s risk-taking ability.

On one hand, in the context of globalization, companies find it difficult to completely isolate themselves from systemic risks. The supply chain networks on which companies rely are often complex and interdependent. Even if a company takes precautionary measures within its own sector, it may still suffer indirect damage due to the impact on upstream and downstream companies [72], leading to supply chain disruptions or failure. In addition, the long-term and uncontrollable nature of climate risk enhances a company’s cautious attitude toward its external environment. This makes management more alert to its potential threats, thereby reducing the willingness to implement high-risk strategies. On the other hand, from the perspective of corporate resource vulnerability, climate risk often leads to the reallocation of resources within the company, such as funds, labor, and materials. For example, in response to climate disasters, a company may need to invest additional resources to repair facilities, establish supply chain contingency plans, or enhance disaster resilience. This reallocation of resources weakens the company’s capacity to support aggressive strategies, forcing it to prioritize the stability of its existing operations. In addition, due to the systemic nature of climate risk, managers find it difficult to effectively mitigate risks through methods such as portfolio diversification. This further intensifies management’s defensive attitude towards high-risk strategies. Therefore, this paper argues that climate risk significantly reduces a company’s risk-taking ability by increasing the uncertainty of the external environment and the vulnerability of internal resources, further lowering the company’s strategic aggressiveness.

Table 8. Mechanism test: Reducing risk-taking.

Variable	(1)	(2)
	Risk	Stra
CRI	−0.005 ***	−0.055 ***
	(−5.67)	(−5.56)
Risk		0.495 ***
		(6.44)
SIZE	−0.004 ***	−0.049 ***
	(−16.33)	(−17.64)
ROA	−0.163 ***	−0.069
	(−27.05)	(−1.01)
LEV	−0.002	−0.154 ***
	(−1.14)	(−8.78)
ROE	−0.011 ***	0.060
	(−3.22)	(1.51)
REC	−0.014 ***	−0.057 *
	(−5.11)	(−1.93)
INV	−0.022 ***	−0.125 ***
	(−9.80)	(−4.91)
BOARD	−0.008 ***	−0.071 ***
	(−5.43)	(−4.35)
INDEP	−0.000 **	0.000
	(−2.11)	(0.21)
_cons	0.164 ***	3.709 ***
	(26.10)	(52.21)
Year	Yes	Yes
Industry	Yes	Yes
N	20,883	20,883
adj. R2	0.226	0.055
Sobel	p = 0.000	Z = −4.254

Note: This table tests the mediation mechanism of “climate risk—risk-taking ability—strategic aggressiveness”. Column (1) shows the significant negative effect of the Climate Risk Index (CRI) on firms’ risk-taking ability (Risk), indicating that climate risk reduces risk-taking capacity. Column (2) controls for risk-taking and finds that the negative effect of CRI on strategic aggressiveness (Stra) remains significant, suggesting a partial mediating role of risk-taking. Both regressions include industry and year fixed effects, with standard errors clustered at the firm level. The Sobel test confirms a highly significant mediation effect (p = 0.000). The t-statistics are in parentheses.*** p < 0.01, ** p < 0.05, * p < 0.1.

reports the results of the mechanism test based on “climate risk-risk-taking-strategic aggressiveness”. Building on the empirical results of Hypothesis 1a, column (1) in Table 8 shows that the regression coefficient of climate risk (CRI) is significantly negative. This indicates that climate risk significantly reduces a company’s risk-taking ability. Column (2) reports the regression results while controlling for both climate risk (CRI) and risk-taking (Risk). The regression coefficient of climate risk (CRI) is significantly negative. The results suggest the existence of partial mediating effects, with higher climate shocks leading to lower strategic aggressiveness by reducing a company’s risk-taking ability.

7. Further Research

This section examines whether the impact of climate risk on strategic aggressiveness varies with differences in firms’ ownership structure, greenness, digitalization, and internationalization, which is of great significance for a comprehensive understanding of how climate risk influences strategic restructuring.

7.1. Ownership Structure

Relatively speaking, private enterprises are more market-oriented and face a more intense competitive environment; therefore, they often adopt more aggressive strategic positioning. For example, they may pursue greater innovation, channel development, and other efforts to secure high-quality resources and larger market spaces. Specifically, first, due to the lack of systematic environmental management capabilities and professional technical reserves, private enterprises have lower levels of carbon emission control and weaker abilities to cope with extreme weather events. As a result, they may find it difficult to actively and effectively mitigate the challenges posed by climate risks, leading to an increase in operating costs. Secondly, private enterprises have lower levels of political connections and lack a deep understanding of climate policies. As a result, they are less able to respond quickly to government-issued green policies, which leads to insufficient investment in green transformation or innovation. Thirdly, the dual limitations of resources and external support exacerbate the likelihood that private enterprises will reduce their strategic aggressiveness when facing climate shocks. Private enterprises often have weaker capital accumulation, making it difficult for them to bear the substantial initial investments required to respond to climate risks. For example, investments in green technology research and development, production equipment upgrades, and environmental protection infrastructure. Compared with state-owned enterprises, private enterprises do not have priority access to special subsidies, low-interest loans, or other policies [73]. This directly undermines the ability and flexibility of private enterprises to address climate risks. Therefore, when exposure to climate risks increases, private enterprises are more likely to reduce their strategic aggressiveness.

Based on the above analysis, this paper sets a dummy variable SOE according to the ownership nature of the enterprise. If the enterprise is a private enterprise, the value is 1; if the enterprise is a state-owned enterprise, the value is 0. The dummy variable of ownership nature and its interaction term with climate risk are added to Model (1) for regression. The empirical results are presented in

Table 9. Further research: Type of enterprise.

Variable	(1)	(2)
	Stra	Stra
CRI		−0.030 *
		(−1.93)
SOE	0.117 ***	0.133 ***
	(20.04)	(17.61)
CRI × SOE		−0.058 ***
		(−3.12)
SIZE	−0.048 ***	−0.045 ***
	(−17.56)	(−16.50)
ROA	−0.113 *	−0.116 *
	(−1.69)	(−1.73)
LEV	−0.120 ***	−0.114 ***
	(−6.84)	(−6.49)
ROE	0.028	0.033
	(0.71)	(0.84)
REC	−0.141 ***	−0.132 ***
	(−4.79)	(−4.51)
INV	−0.114 ***	−0.123 ***
	(−4.51)	(−4.87)
BOARD	−0.017	−0.017
	(−1.01)	(−1.01)
INDEP	0.001	0.001
	(1.48)	(1.27)
_cons	3.515 ***	3.464 ***
	(48.93)	(48.02)
Year	Yes	Yes
Industry	Yes	Yes
N	20,589	20,589
adj. R2	0.072	0.074

Note: This table examines the heterogeneous impact of climate risk on strategic aggressiveness based on firm ownership type. A dummy variable SOE is set, with private firms coded as 1 and state-owned firms as 0. Column (1) shows a significantly positive coefficient for SOE, indicating that private firms exhibit higher strategic aggressiveness and make more aggressive strategic choices. Column (2) includes the interaction term between ownership type and climate risk (CRI×SOE), which is significantly negative, suggesting that the inhibitory effect of climate risk on strategic aggressiveness is stronger in private firms, leading them to adopt more defensive strategies. Both regressions control for year and industry fixed effects, with standard errors clustered at the firm level. The t-statistics are presented in parentheses.*** p < 0.01, ** p < 0.05, * p < 0.1.

. In column (1) of Table 9, the coefficient of SOE is significantly positive, indicating that in private enterprises, strategic aggressiveness is higher, and strategic choices are more aggressive. In column (2), the coefficient of the interaction term between ownership nature and climate risk (CRI × SOE) is significantly negative. This suggests that in private enterprises, the inhibitory effect of climate risk on strategic aggressiveness is more pronounced, and strategic defensiveness is strengthened.

7.2. Degree of Greening

Enterprises with a lower degree of greening often face intense competition in their industries, especially in the context of the market’s gradual shift towards a low-carbon economy and environmental protection. These enterprises may struggle with a mismatch between traditional production models and operational strategies and new market demands, resulting in significant pressure on their survival and development. To cope with this pressure, such enterprises typically undergo strategic restructuring, increasing their strategic aggressiveness to enhance their market position and competitiveness.

However, under the impact of increased exposure to climate risks, enterprises with a low degree of greening tend to adopt more defensive strategies. The main reasons for this are the lack of green technology and low-carbon transformation capabilities, as well as constraints imposed by policy risks and compliance pressures. On the one hand, enterprises with a low degree of greening often rely on traditional, high-energy-consuming, and high-emission production equipment and technological systems [74]. These technologies typically lack resilience and adaptability when dealing with climate risks, such as extreme weather events and resource shortages, making them vulnerable. This traditional technological system struggles to provide flexible and effective solutions to climate risks, further exacerbating the operational instability. At the same time, replacing technology requires large-scale investments from enterprises, and the return on investment may not be sufficient in the short term [75]. The lack of short-term returns may further intensify the pressure on the company’s financial allocation, thus suppressing its willingness to implement proactive response strategies. Therefore, when facing an increase in climate risk exposure, enterprises with low levels of green development will prioritize ensuring the stability of their production capacity. On the other hand, for enterprises with lower levels of green development, policy risks and compliance pressures may be more significant. With the ongoing strengthening of climate policies globally, governments in various countries are increasing their control over high-emission enterprises through measures such as carbon taxes and carbon-emission trading systems. Enterprises with lower levels of green development typically emit more greenhouse gases, which may lead to them having to pay higher carbon taxes or significant additional costs in carbon emission trading markets. This substantially increases their operational burden. At the same time, some countries require enterprises to meet emission reduction targets within a specified period. Enterprises with lower levels of green development may face penalties, restrictions, or market access issues due to their failure to make timely environmental compliance adjustments. This results in increased compliance pressure, weakening their flexibility in responding to climate risk. Therefore, for enterprises with low levels of green development, the inhibiting effect of climate risk on strategic aggressiveness is more pronounced.

Based on the above analysis, this paper incorporates the degree of corporate greening and its interaction term with climate risks into model (1) for regression. Considering the significant differences in the ratings of companies’ ESG performance due to the lack of unified measurement, scope, and weighting standards by different rating agencies [76]. This paper follows the method of [77], using the Bloomberg ESG score index to measure the degree of corporate greening, represented by ESG1. Additionally, since the Wind ESG indicators better integrate dynamic and intelligent data processing technologies, they are selected as a supplementary indicator to be included in the model, represented by ESG2. Considering that this paper focuses on the more significant inhibitory effect of climate risk on strategic aggressiveness in companies with low levels of greening, the inverse values of ESG1 and ESG2 are used. The higher the value, the lower the degree of corporate greening. After adding the level of greening and its interaction term with climate risk into model (1), the empirical results are shown in

Table 10. Further research: The degree of corporate greening.

Variable	Bloomberg ESG Index		Wind ESG Index
	(1)	(2)	(3)	(4)
	Stra	Stra	Stra	Stra
CRI		−0.180 ***		−0.209 ***
		(−3.87)		(−2.95)
ESG1	0.001 *	0.002 ***
	(1.78)	(2.62)
CRI × ESG1		−0.003 **
		(−2.52)
ESG2			0.001	0.008
			(0.21)	(1.23)
CRI × ESG2				−0.024 **
				(−2.14)
SIZE	−0.053 ***	−0.050 ***	−0.053 ***	−0.051 ***
	(−11.06)	(−10.45)	(−14.17)	(−13.37)
ROA	−0.436 ***	−0.465 ***	−0.019	−0.018
	(−2.95)	(−3.15)	(−0.26)	(−0.24)
LEV	−0.185 ***	−0.178 ***	−0.126 ***	−0.118 ***
	(−5.93)	(−5.69)	(−5.05)	(−4.70)
ROE	0.257 ***	0.271 ***	−0.086 *	−0.081*
	(3.48)	(3.67)	(−1.85)	(−1.74)
REC	−0.119 **	−0.109 **	−0.135 ***	−0.132 ***
	(−2.42)	(−2.21)	(−3.34)	(−3.26)
INV	−0.215 ***	−0.230 ***	−0.157 ***	−0.172 ***
	(−5.43)	(−5.79)	(−4.11)	(−4.49)
BOARD	−0.052 **	−0.050 **	−0.091 ***	−0.093 ***
	(−2.17)	(−2.10)	(−3.78)	(−3.89)
INDEP	−0.001	−0.001	−0.002 **	−0.002 **
	(−0.64)	(−0.75)	(−2.09)	(−2.28)
_cons	3.899 ***	3.869 ***	3.950 ***	3.956 ***
	(33.75)	(33.35)	(39.64)	(38.35)
Year	Yes	Yes	Yes	Yes
Industry	Yes	Yes	Yes	Yes
N	9087	9087	9807	9807
adj. R2	0.059	0.062	0.056	0.058

Note: This table examines the heterogeneous effect of climate risk on strategic aggressiveness based on firms’ greening levels. Greening is measured using the inverted Bloomberg ESG score (ESG1) and Wind ESG index (ESG2), where higher values indicate lower greening levels. Columns (1) and (3) show that lower greening significantly increases the strategic aggressiveness. Columns (2) and (4) reveal a significant negative interaction between greening and climate risk, indicating that climate risk has a stronger inhibitory effect on strategic aggressiveness in firms with lower greening, pushing them toward more defensive strategies. All models control for industry and year fixed effects with clustered standard errors. The t-statistics are in parentheses.*** p < 0.01, ** p < 0.05, * p < 0.1.

. In column (1), the coefficient of the level of greening (ESG1) is significantly positive, indicating that the lower the level of greening, the higher the strategic aggressiveness of the firm. In columns (2) and (4), the interaction terms between the level of greening and climate risk have significantly negative coefficients. This suggests that in firms with lower levels of greening, the inhibitory effect of climate risk on strategic aggressiveness is more pronounced, leading to increased strategic defensiveness.

7.3. The Degree of Corporate Digitalization

The higher the degree of digital transformation, the stronger the enterprise’s ability to acquire information and optimize its resources. However, this ability may also drive enterprises to reduce their strategic aggressiveness when facing the impacts of climate risk. On the one hand, digital transformation significantly enhances the depth of information acquisition and the accuracy of decision-making support [78,79]. By building real-time monitoring systems, companies can accurately capture the potential threats posed by climate risks to their operations, supply chains, and markets. This sensitivity to climate risks may amplify a company’s focus on its negative impacts. Faced with the potential for high costs or significant losses in the short term, companies prioritize reducing direct risks. This cautious decision-making approach leads companies to lower their strategic aggressiveness. On the other hand, highly digitalized companies often rely on specific technological systems, which can lead to a certain “lock-in effect”. Specifically, companies with a high degree of digitalization may have already invested in specific, low-carbon technologies or energy systems. The fixed nature of these technological paths may limit a company’s ability to explore new approaches to addressing climate risks. In other words, while the resource optimization capabilities of digitalization improve the efficiency of a company’s existing systems [80], they also increase the risk costs associated with adjustments or transformations. As a result, when selecting strategies, companies may be more inclined to maintain the status quo rather than risk pursuing aggressive innovation paths.

Based on the above analysis, this paper adds the degree of digital transformation and its interaction with climate risk to the regression model (1). To make the results more convincing, two approaches are used to measure the degree of digital transformation. Following the approach of Wu et al. (2021), the frequency of 76 digital-related terms across five dimensions—artificial intelligence, big data, cloud computing, blockchain, and digital technology—is counted, and the result is denoted as DTF_A [81]. Additionally, drawing on the method of Zhao et al. (2021), the frequency of 99 digital-related terms across four dimensions—digital technology applications, Internet business models, intelligent manufacturing, and modern information systems—is counted, with the result denoted as DTF_B [82]. The empirical results are presented in

Table 11. Further research: Digital transformation framework.

Variable	DTF_A		DTF_B
	(1)	(2)	(3)	(4)
	Stra	Stra	Stra	Stra
CRI		−0.063 ***		−0.063 ***
		(−5.63)		(−4.97)
DTF_A	0.002 ***	0.003 ***
	(14.86)	(13.49)
CRI × DTF_A		−0.001 *
		(−1.83)
DTF_B			0.010 ***	0.013 ***
			(16.04)	(15.46)
CRI × DTF_B				−0.004 ***
				(−2.90)
SIZE	−0.058 ***	−0.055 ***	−0.058 ***	−0.055 ***
	(−21.49)	(−20.25)	(−21.75)	(−20.42)
ROA	−0.138 **	−0.140 **	−0.132 **	−0.132 **
	(−2.09)	(−2.12)	(−2.00)	(−2.01)
LEV	−0.142 ***	−0.137 ***	−0.146 ***	−0.140 ***
	(−8.19)	(−7.87)	(−8.43)	(−8.08)
ROE	0.045	0.050	0.037	0.041
	(1.17)	(1.28)	(0.96)	(1.07)
REC	−0.132 ***	−0.125 ***	−0.156 ***	−0.154 ***
	(−4.50)	(−4.28)	(−5.31)	(−5.23)
INV	−0.117 ***	−0.126 ***	−0.122***	−0.134 ***
	(−4.65)	(−5.04)	(−4.87)	(−5.33)
BOARD	−0.068 ***	−0.068 ***	−0.069 ***	−0.070 ***
	(−4.17)	(−4.21)	(−4.28)	(−4.34)
INDEP	−0.000	−0.000	−0.000	−0.000
	(−0.14)	(−0.39)	(−0.21)	(−0.54)
_cons	3.929 ***	3.879 ***	3.949 ***	3.894 ***
	(56.78)	(55.88)	(57.06)	(56.16)
Year	Yes	Yes	Yes	Yes
Industry	Yes	Yes	Yes	Yes
N	21,006	21,006	21,006	21,006
adj. R2	0.063	0.066	0.065	0.069

Note: This table examines the heterogeneous impact of climate risk on strategic aggressiveness based on the degree of digital transformation. Two measurement approaches, DTF_A and DTF_B, are used following the relevant literature. Columns (1) and (3) show that higher levels of digital transformation significantly increase the strategic aggressiveness of firms. In columns (2) and (4), the interaction terms between digital transformation and climate risk are significantly negative, indicating that the suppressive effect of climate risk on strategic aggressiveness is more pronounced in firms with higher digital transformation levels. All models control for industry and year-fixed effects, with clustered standard errors. The t-statistics are reported in parentheses.*** p < 0.01, ** p < 0.05, * p < 0.1.

. In columns (1) and (3), the coefficients of DTF_A and DTF_B are significantly positive, indicating that the higher the degree of digital transformation, the greater the strategic aggressiveness of the company. In columns (2) and (4), the coefficients of the interaction terms between digital transformation and climate risk are significantly negative. This suggests that in companies with a high degree of digital transformation, the suppressive effect of climate risk on strategic aggressiveness is more pronounced, leading to an increased defensive strategy.

7.4. Degree of Internationalization

Enterprises implementing internationalization strategies often need to adopt more aggressive strategic positioning to cope with challenges and risks in different regions and enhance their competitiveness in the international market. However, when faced with climate shocks, the strategic aggressiveness of enterprises with a higher degree of internationalization may also be constrained. Given that corporate internationalization strategy can be divided into internationalization depth and breadth [82,83,84,85], this paper discusses the impact of climate shocks from these two perspectives. Internationalization depth refers to the extent of a company’s investment and operations in a single country or region. When a company has deep investments and operations in a particular region, it tends to reduce its strategic aggressiveness when confronted with climate risks. This is because companies often establish close ties with local suppliers, customers, and logistics networks in regions with deep investments. This makes the company highly dependent on economic, social, and environmental changes in the region, especially in areas where climate risks are more prominent. This dependence exposes the company to significant climate risk exposure within the supply chain and operational networks in that market. The impact of climate risk on the supply chain has a diffusion effect, where a disruption at any stage can trigger a chain reaction throughout the entire supply chain, affecting a company’s production and delivery capabilities [86]. This situation increases the complexity of supply chain management, forcing companies to prioritize operational stability in the face of climate risks and reduce potential losses in resource allocation and supply chain adjustment. Moreover, companies with deep internationalization often have significant investments and dependencies in a single market. Once a market is affected by climate disasters, extreme weather events, or policy changes, it may directly impact production, inventory, transportation, and overall operational capabilities [87]. This means that companies, when facing increased exposure to climate risks, must consider not only short-term production disruptions and logistics interruptions but also the potential long-term impacts of these events on their brand, market share, and customer trust. These factors all lead companies to adopt a more risk-averse approach in their strategic decisions, reducing their strategic aggressiveness.

International breadth refers to the geographic scope of a company’s operations, encompassing multiple countries and regions. In the context of globalization, companies with high international breadth, due to their operations across various countries and regions, face significant heterogeneity in climate risks, as their operational scope spans different geographic environments, market structures, and supply chain networks [87]. For example, Southeast Asia may face frequent typhoons and flooding, while Africa may experience droughts and water scarcity issues. This geographic variability makes it difficult for companies to adopt uniform response strategies. In addition, differences in the intensity of climate policies across countries further increase the complexity of corporate responses to climate risks. For example, the European Union has implemented a stringent carbon emissions trading system (EU ETS), requiring companies to bear higher responsibility for emission reduction. In contrast, some developing countries may adopt more lenient environmental policies. These policy intensity differences compel companies to develop differentiated response strategies in different regions, significantly increasing compliance costs and management burdens. At the same time, this also intensifies the company’s concerns about attempting high-risk strategies, inhibiting its willingness to actively pursue high-risk climate adaptation strategies.

Based on the above analysis, this paper adds the degree of internationalization and its interaction term with climate risk to the regression model (1). The breadth of internationalization is measured by the number of regions and countries covered by the overseas subsidiaries that the firm owns in the current year, denoted as Inter_breadth. The depth of internationalization is measured by the number of overseas subsidiaries a firm owns, denoted as Inter_depth. The empirical results are shown in

Table 12. Further research: Degree of internationalization of the enterprise.

Variable	Inter_depth		Inter_breadth
	(1)	(2)	(3)	(4)
	Stra	Stra	Stra	Stra
CRI		−0.049 ***		−0.043 ***
		(−4.55)		(−3.90)
Inter_depth	0.006 ***	0.007 ***
	(9.43)	(8.87)
CRI × Inter_depth		−0.003 **
		(−2.48)
Inter_breadth			0.010 ***	0.013 ***
			(8.11)	(8.36)
CRI × Inter_breadth				−0.009 ***
				(−3.20)
SIZE	−0.062 ***	−0.060 ***	−0.061 ***	−0.059 ***
	(−21.92)	(−20.91)	(−21.61)	(−20.62)
ROA	−0.210 ***	−0.214 ***	−0.210 ***	−0.215 ***
	(−2.91)	(−2.97)	(−2.91)	(−2.99)
LEV	−0.161 ***	−0.157 ***	−0.162 ***	−0.158 ***
	(−9.12)	(−8.92)	(−9.15)	(−8.97)
ROE	0.097 **	0.101 **	0.095 **	0.099 **
	(2.31)	(2.39)	(2.26)	(2.35)
REC	−0.088 ***	−0.082 ***	−0.089 ***	−0.083 ***
	(−3.00)	(−2.80)	(−3.01)	(−2.82)
INV	−0.137 ***	−0.145 ***	−0.137 ***	−0.145 ***
	(−5.35)	(−5.64)	(−5.34)	(−5.64)
BOARD	−0.069 ***	−0.070 ***	−0.070 ***	−0.071 ***
	(−4.18)	(−4.23)	(−4.24)	(−4.31)
INDEP	0.000	−0.000	0.000	−0.000
	(0.09)	(−0.11)	(0.11)	(−0.09)
_cons	4.019 ***	3.979 ***	4.011 ***	3.972 ***
	(56.12)	(55.33)	(55.74)	(54.98)
Year	Yes	Yes	Yes	Yes
Industry	Yes	Yes	Yes	Yes
N	20,644	20,644	20,644	20,644
adj. R2	0.058	0.060	0.057	0.060

Note: This table examines the heterogeneous impact of climate risk on strategic aggressiveness based on the degree of internationalization. Internationalization breadth is measured by the number of countries and regions covered by the firm’s overseas subsidiaries in the current year (Inter_breadth), and internationalization depth is measured by the number of overseas subsidiaries (Inter_depth). Columns (1) and (3) show that a higher degree of internationalization significantly increases strategic aggressiveness. In columns (2) and (4), the interaction terms between internationalization and climate risk are significantly negative, indicating that climate risk has a stronger suppressive effect on strategic aggressiveness in firms with higher internationalization, leading to a more defensive strategic stance. All models control for industry and year fixed effects, with clustered standard errors. The t-statistics are in parentheses.*** p < 0.01, ** p < 0.05, * p < 0.1.

, where Columns (1) and (2) report the interaction results for internationalization depth, and Columns (3) and (4) report the interaction results for internationalization breadth. In columns (1) and (3), the coefficients for Inter_depth and Inter_breadth are significantly positive. This indicates that the higher the degree of internationalization, the greater the firm’s strategic aggressiveness and the more aggressive their strategic choices. In columns (2) and (4), the interaction terms of both types of internationalization with climate risk are significantly negative. This suggests that for firms with higher internationalization, the suppressive effect of climate risk on strategic aggressiveness is more pronounced, leading to a stronger defensive strategic stance.

8. Extension Study: From Passive Strategic Defense to Proactive Integration

As demonstrated earlier, firms increase their strategic defensiveness when facing climate shocks, which primarily manifests as passive defensiveness. Although passive strategic defense is not necessarily a negative state, it may not represent the firm’s ultimate operational strategy. Given that climate risk is not a short-term factor, firms aiming for sustainable development in a highly competitive market must continuously strengthen their competitiveness and adopt proactive approaches. Therefore, with increasing climate risk exposure, firms are more likely to transition from passive defensiveness to active integration, especially in supply chain management. As a critical link between firms and the market, the stability of the supply chain directly affects a firm’s ability to respond to external risks. In recent years, global supply chains (GSCs) have been frequently disrupted. Baldwin and Freeman (2022) point out that exogenous shocks to supply chains mainly include natural disasters, policy changes, and political instability, which tend to be region- and industry-specific [88]. In response to these diverse and complex risks, firms, while strengthening passive defense, also need to make strategic choices in their supply chain structures—whether to enhance control and coordination through vertical integration or to maintain flexibility and efficiency through a specialized division of labor. Based on this, the present study further explores, from the supply chain perspective, whether firms facing increased climate risk exposure and strengthened passive defensiveness are more likely to adopt a vertical integration strategy or a specialization strategy.

A corporate vertical integration strategy refers to the expansion of a firm’s operations within the supply chain by extending its upstream or downstream operations to control key resources or distribution channels. Existing research suggests that vertical integration can both provide a competitive advantage for the company and bring about anti-competitive effects [89,90]. Building a vertical integration strategy requires greater resource investment from firms, such as the establishment of new factories, warehousing facilities, and logistics systems. This inevitably entails higher capital demand [91]. Since these fixed asset investments are not only costly but also difficult to liquidate quickly, firms are more likely to pursue vertical integration strategies when adopting a more aggressive strategic position. In contrast, when firms adopt a defensive strategic stance, the incentive to build vertical integration strategies tends to weaken.

However, under the influence of climate risk, supply chain stability declines, and transaction risks increase, such as higher energy consumption and rising logistics costs due to climate change. Therefore, from the perspective of climate risk exposure, firms are more inclined to build integration strategies to strengthen their control over external resources, reduce transaction costs, and mitigate supply chain volatility. Accordingly, this study hypothesizes that as firms’ climate risk exposure increases, it suppresses the development path of specialization strategies under a defensive strategic stance while promoting a higher level of vertical integration strategy, thereby accelerating supply chain integration.

This study adopts the modified value-added approach (Value Added to Sales, VAS) to measure the level of vertical integration in firms, drawing on the methodologies of Fan and Fan (2017) [92]. The VAS metric quantifies the proportion of a firm’s value added to its sales revenue. A higher VAS value indicates a higher degree of vertical integration. At the same time, for ease of explanation, this study constructs a corporate strategic defensiveness characteristic (Stra_f) index, which serves as the inverse indicator of Stra. The interaction term between climate risk and strategic defensiveness (CRI × Stra_f) is introduced.

Table 13. Research on supply chain integration.

Variable	Vertical Integration
	(1)	(2)
	VAS	VAS
Stra_f	−0.093 ***	−0.098 ***
	(24.85)	(−19.92)
CRI		0.035
		(1.38)
CRI × Stra_f		0.019 *
		(1.73)
SIZE	−0.010 ***	−0.010 ***
	(−6.95)	(−6.69)
ROA	0.455 ***	0.454 ***
	(9.15)	(9.13)
LEV	−0.124 ***	−0.123 ***
	(−12.44)	(−12.33)
ROE	−0.008	−0.007
	(−0.28)	(−0.25)
REC	−0.167 ***	−0.166 ***
	(−10.56)	(−10.49)
INV	0.010	0.010
	(0.71)	(0.65)
BOARD	0.056 ***	0.056 ***
	(6.34)	(6.32)
INDEP	0.000	0.000
	(0.50)	(0.42)
_cons	0.259 ***	0.242 ***
	(6.31)	(5.78)
Year	Yes	Yes
Industry	Yes	Yes
N	14,587	14,587
adj. R2	0.197	0.197

Note: This table examines how increased strategic defensiveness under climate risk affects vertical integration. Vertical integration is measured by the modified value added to sales (VAS), with higher values indicating greater integration. The strategic defensiveness index (Stra_f) and its interaction with climate risk (CRI × Stra_f) are included. Column (1) shows a significant negative relationship between defensiveness and integration, and Column (2) shows a positive interaction term, indicating that firms strengthen vertical integration proactively while also exhibiting passive defense under rising climate risk. Industry and year fixed effects are controlled for using clustered standard errors. The t-statistics are in parentheses.*** p < 0.01, ** p < 0.05, * p < 0.1.

reports these results in columns (1) and (2). The coefficient of the strategic defensiveness level (Stra_f) in Column (1) is significantly negative, indicating that as the level of corporate strategic defensiveness increases, the firm’s vertical integration strategy is significantly reduced. In Column (2), the coefficient of the interaction term (CRI × Stra_f) is significantly positive. This result indicates that although an increase in climate risk exposure intensifies passive strategic defensive behaviors, firms also proactively construct vertical integration strategies to better adapt to climate shocks.

9. Conclusions and Implications

Climate change, one of the major global challenges facing humanity, is a common issue for all countries and one of the biggest challenges of the 21st century. This paper selects Chinese A-share listed companies from 2011 to 2022 as the research sample to examine the relationship between climate change risks and strategic aggressiveness. The results show that an increase in climate risk exposure leads to a change in corporate strategic positioning, primarily manifesting as a reduction in strategic aggressiveness and an enhancement of strategic defensiveness. This conclusion remains valid even after the robustness tests. In the mechanism analysis, it is confirmed that an increase in climate risk exposure raises firms’ financing constraints and operational risks and reduces their risk-taking capacity, thereby leading to a passive strategic defensive state. Further analysis indicates that this effect is more pronounced in private enterprises, firms with a lower level of greenness, those undergoing aggressive digital transformation, and those with a higher degree of internationalization. Finally, this study finds that although an increase in climate risk exposure intensifies passive strategic defensive behaviors, firms also proactively construct vertical integration strategies to better adapt to climate shocks.

Based on the findings of this study, the following recommendations are proposed for companies to address climate risk. First, firms should improve their financing and risk management mechanisms to enhance their strategic resilience. This study finds that climate risk exacerbates firms’ financing constraints and operational uncertainty, thereby suppressing their strategic aggressiveness. Therefore, firms should actively expand green financing channels, such as green loans and sustainability bonds, to alleviate their financial pressure and reduce financing costs. At the same time, firms should establish dedicated emergency funds to strengthen their financial capacity to respond to extreme climate events and ensure operational stability.

Second, firms should accelerate their green transformation to solidify the foundations for emission reductions across the entire value chain. This study finds that firms with lower levels of green transformation are more likely to adopt defensive strategies in response to climate risk, which may negatively affect their long-term development potential. Firms should proactively increase their investments in low-carbon technologies and promote green technology research and development. At the same time, they should actively build sustainable supply chain networks to achieve carbon reduction targets across the entire value chain, from raw material procurement to product delivery, thereby advancing green strategies from localized efforts to systemic upgrades.

Third, regulators should strengthen their strategic guidance. The findings of this study indicate that under climate shocks, firms tend to exhibit a certain degree of defensive behavior, reflecting excessive avoidance of climate risk. In response, regulators should expedite the formulation of complementary policies related to climate risk, strengthen performance assessments of low-carbon transitions, provide credit support for strategic transformations, and lower institutional barriers for firms to proactively pursue such transformations. At the same time, regulators should actively encourage firms to view climate risk as an opportunity for transformation rather than a burden, thereby promoting their transition toward high-quality and sustainable development.

This study had certain limitations. First, the measurement of the Climate Risk Indicator (CRI) is based on the frequency of relevant keywords in the Management Discussion and Analysis (MD&A) section. Although this approach draws on extensive prior research [44,59], the indicator may still be subject to valuation biases due to firms’ disclosure tendencies and motives, which are inherently subjective factors. Moreover, current data limitations make it difficult to determine whether the disclosed climate risk information reflects actual exposure or is strategic rhetoric by firms. There is a need for regulatory authorities to accelerate the improvement of disclosure frameworks and further standardize the disclosure methods and criteria related to climate information. Finally, this study focuses on the Chinese capital market, which is undergoing a transitional phase and actively promoting green reforms, providing a suitable context for examining climate risk and corporate strategy. However, the pace of the green transition varies across countries, and firms differ in their awareness and capacity to address climate risks. Therefore, when applying the findings of this study to other countries, it is important to fully consider the heterogeneity of institutional contexts and geographical environments.

Despite the aforementioned challenges, climate risk is increasingly becoming a strategic issue that firms cannot ignore. Against this backdrop, future research could incorporate Prospect Theory and Market Timing Theory to further investigate firms’ behavioral responses to climate shocks, thereby integrating climate risk into the framework of behavioral finance. Moreover, with the increasing demands from climate regulatory bodies on corporate disclosure and the gradual improvement of related databases, more objective and comprehensive climate risk data are expected to become available in the future, thereby facilitating more in-depth and extensive empirical research.