Search Results (72)

The current study aims to identify the factors influencing the disclosure of climate-related risk information by the MENA banking sector and how bank financial stability acts as a moderator. The study draws from agency theory, resource dependency theory, and organizational legitimacy theory. Textual analysis is used to analyze a panel data set comprising 46 banks of 13 MENA countries for the years 2020 to 2024 (230 observations). We investigate the impact of board independence, board size, and gender diversity on climate risk disclosure. It is found that while board size and gender diversity have a positive effect on CRD, there is no direct effect of board independence on CRD. However, after taking bank financial stability (Z-score) into account as a moderating variable, it is revealed that there is a significantly positive relationship between board independence and bank financial stability. Therefore, it can be said that independent board members are helpful in CRD only when banks have sound financial stability. This study provides various robustness tests through subsample analysis and alternative methods of estimating model parameters. Full article

Although climate change is increasingly recognized as a material risk for firms, the extent to which climate-related risks are operationally integrated into enterprise risk management (ERM) processes remains unclear. This article presents a structured literature review to answer the question of how firms have integrated climate risk assessment, considering both physical and transition risks, into ERM processes. Following the PRISMA 2020 protocol, 22 published articles from Web of Science and Scopus, published between 2018 and 2026, were included in the review. Articles covering financial institutions, as well as policy-only and sectoral-only studies, were excluded. The articles were screened through five eligibility criteria: firm-level focus, governance, risk assessment, climate risk management and/or ERM, and type of climate risk. All articles were assessed by two researchers to reduce bias, and Cohen’s kappa was calculated. Following coding and qualitative analysis, the findings indicate that firms have advanced governance structures, disclosure practices, and analytical assessment tools for climate risk assessment, while operational integration into ERM systems remains limited. Results also reveal persistent integration gaps, including strategic–operational disconnection, temporal and methodological mismatches, symbolic implementation, and systemic and knowledge barriers. These challenges constrain the effective translation of climate risk information into risk management practices and strategic planning. Overall, the study, based only on academic literature, concludes that climate risk integration is still incomplete and weakly embedded within ERM systems. In the expanding regulatory landscape, particularly with IFRS S2, the study provides a baseline for understanding current firm-level practices and future developments in climate risk integration at the academic level. Full article

The transition toward a sustainable bioeconomy and the integration of environmental, social, and governance (ESG) principles into finance have increased the demand for green skills in the financial sector. However, the literature remains fragmented, as green skills are often discussed through related constructs such as ESG competencies, sustainability knowledge, green human capital, green training, or green HRM outcomes. This study systematizes existing research and develops a finance-specific framework explaining what green skills in finance are, how they are formed, and how they support sustainable practice and bioeconomy-oriented capital allocation. A systematic literature review was conducted in accordance with PRISMA 2020 guidelines through searches in Scopus, Web of Science, and Google Scholar. After applying predefined inclusion and exclusion criteria, 47 articles were included. The findings show that green skills in finance are multidimensional and include environmental and sustainability knowledge, digital and analytical skills, behavioral and value-oriented skills, and managerial, strategic, and creative capabilities. Their formation is shaped by education and professional training, green HRM practices, and institutional and regulatory mechanisms. Overall, green skills function as human, organizational, and institutional capacities that support ESG credibility, climate-risk assessment, sustainability disclosure, responsible capital allocation, and anti-greenwashing practices in the transition toward a sustainable bioeconomy. Full article

Increasing attention has been directed toward the consistency between sustainability disclosures and financial statements, giving rise to the concept of financial connectivity. A prevailing assumption in this debate is that climate-related risks and opportunities will directly translate into quantifiable impacts on financial statement amounts under International Financial Reporting Standards (IFRS). This study challenges that assumption by arguing that connectivity does not necessarily materialise through immediate recognition outcomes in financial statements. To address this gap, the paper develops a three-stage, judgement-based connectivity framework that links climate-related disclosures under IFRS S1 and IFRS S2 to recognition, measurement, and disclosure decisions under IFRS Accounting Standards. Rather than treating sustainability disclosures as direct valuation inputs, the framework evaluates each disclosed risk or opportunity through structured accounting judgements. The framework is illustrated using the 2024 climate-related disclosures of a listed manufacturing entity (Company A). The illustrative application suggest that significant climate exposures do not automatically result in recognised provisions under IAS 37. Instead, connectivity primarily operates through assumption-setting mechanisms embedded in existing measurement models, including impairment testing (IAS 36), asset life assessments (IAS 16), and deferred tax evaluations (IAS 12). The study makes three interrelated contributions: it reconceptualises financial connectivity as a structured judgement process rather than a numerical reconciliation exercise; it operationalises this reconceptualisation through a replicable step-by-step mapping framework that links IFRS S2 disclosures to specific IFRS recognition, measurement, and disclosure requirements without expanding existing accounting rules; and it clarifies that disciplined non-recognition may represent adherence to accounting integrity rather than a reporting deficiency. These contributions distinguish the framework from existing professional guidance by making the underlying judgement logic explicit and replicable within the scope of IFRS-based financial reporting. Full article

With growing global concern over climate risk, high-carbon enterprises are assuming an increasingly critical role in strengthening climate resilience and fostering low-carbon development. However, how climate risk disclosure shapes their carbon performance—specifically through what mechanisms and pathways—remains a pivotal yet underexplored question. To address this gap, this study constructs a panel dataset comprising Chinese listed high-carbon companies over the period 2006–2022 and employs a two-way fixed-effects econometric model to assess how climate risk disclosure affects carbon performance while investigating the underlying mediating channel. The empirical results provide robust evidence that enhanced climate risk disclosure improves the carbon performance of high-carbon enterprises. Mechanism analysis indicates that this beneficial outcome is mainly achieved through promoting green technological innovation and easing corporate financial constraints. Heterogeneity analysis further shows that the effect is stronger among smaller companies, firms operating in less concentrated industries, and those headquartered in China’s eastern region. The policy implications derived from these findings include establishing and strengthening a mandatory climate risk disclosure framework, introducing targeted incentives for green innovation and transition finance and tailoring climate risk management strategies according to firm-specific characteristics. Overall, this study underscores climate risk disclosure as a crucial factor in supporting the shift toward low-carbon operations among high-carbon enterprises. Full article

Climate-related financial risks have become a central concern for financial institutions and regulators, particularly within the European financial system. This paper examines how climate-related risks are integrated into governance, risk assessment, and regulatory practices in European financial institutions. Using a structured narrative literature review of academic and institutional sources published between 2015 and 2026, the study synthesizes evidence on physical, transition, and liability risks, as well as the frameworks and tools used to assess them, including climate stress testing, scenario analysis, and climate value-at-risk models. The findings indicate that climate considerations are increasingly embedded within governance structures and supervisory frameworks; however, implementation remains fragmented due to inconsistent data, methodological limitations, and institutional barriers. The review further highlights that existing risk models often struggle to capture the long-term and non-linear nature of climate-related uncertainty. This paper contributes to the literature by linking financial stability theory and institutional theory to explain the persistent gap between regulatory ambition and institutional practice within the European context. The study concludes by discussing implications for supervisory policy, disclosure standardization, and climate-risk integration in financial decision-making. Full article

This paper examines how the identification of climate risks relates to the declared scope of disclosures under the ESRS E1 standard, growing regulatory pressure, and potential inconsistencies between internal risk assessment and external reporting. It introduces a composite measure, the Climate Reporting Readiness Index (CRRI), which combines three elements: risk identification, declared disclosures, and the consistency between them. The study is methodological in scope and aims to propose a generalizable measurement framework. The results show a statistically significant negative association between the extent of risk identification and the scope of declared disclosures, indicating that broader internal recognition of climate risks does not necessarily translate into broader declared reporting. Differences between identified risks and disclosures are also observed, suggesting that reported information does not fully correspond to the scope of identified risks. Transition risks are identified more frequently than physical risks. Analysis of specific disclosures shows that the identification of transition risks is associated with a lower probability of declaring information on transition plans and policies, while no robust statistically significant relationship is found between physical risks and disclosures of financial effects. The findings highlight the practical need to strengthen the alignment between internal climate risk identification processes and external ESRS E1 disclosure practices, as these processes may remain partially disconnected in organizational practice. The proposed index provides a diagnostic tool for companies seeking to improve reporting processes, regulators monitoring preparedness for ESRS E1 implementation, and stakeholders assessing the credibility and maturity of climate-related disclosures. Full article

Mandatory Environmental, Social, and Governance (ESG) disclosure requirements—anchored in Corporate Sustainability Reporting Directive (CSRD), International Sustainability Standards Board (ISSB), and Task Force on Climate-related Financial Disclosures (TCFD)—have placed unprecedented demands on supply chain data quality and auditability. Blockchain technology, combining immutability, decentralised governance, and smart contract automation, has emerged as a candidate infrastructure for addressing verification deficits across multi-tier supply chains. To our knowledge, no prior systematic review has simultaneously examined the blockchain specifically for formal ESG transparency and sustainability reporting across all three ESG dimensions within the post-CSRD mandatory reporting landscape. This study presents a systematic literature review (PRISMA 2020). Scopus and Web of Science searches identified 1166 records (2016–2026); after deduplication, 761 unique records were screened, and after blinded screening (κ = 0.84), 96 studies were included. Five blockchain application typologies are identified (T1–T5), spanning provenance tracing, smart contract compliance, carbon accounting, supplier data aggregation, and ESG disclosure systems. A structural asymmetry is identified: governance is addressed in 96% of studies (77.1% under the strictest G-CONFIRMED recoding; 95.8% under the moderate interpretation, including borderline cases), the environmental pillar in 49%, and the social dimension in 21%, explained through institutional theory, with significant implications for CSRD and Corporate Sustainability Due Diligence Directive (CSDDD). Key barriers include scalability, interoperability, and the blockchain–GDPR (General Data Protection Regulation) tension. Three principal contributions are made: (i) a systematic typology of blockchain for ESG transparency; (ii) institutional-theory explanation of ESG dimension asymmetry; and (iii) a research agenda centred on AI–blockchain convergence and post-CSRD empirical studies. The review is limited to English-language peer-reviewed literature. Full article

This study examines corporate carbon emissions of Korean firms from an ESG perspective and develops an AI-based screening framework to improve the identification of firms likely to exceed regulatory emission thresholds. As global climate policies and carbon pricing mechanisms expand, understanding the emission profiles of listed companies has become increasingly important for regulators, investors, and policymakers. Despite growing ESG disclosure, reliable firm-level screening tools for carbon emissions remain limited. Using a pooled annual panel of KOSPI-listed non-financial firms from 2019 to 2024, the study constructs a dataset of 552 firm-year observations. Firms are classified as high-emission when annual emissions exceed the Korean Emissions Trading Scheme (K-ETS) regulatory threshold of 125,000 tCO₂e. To evaluate predictive performance, the analysis compares multiple machine learning models (RF, SVM, XGBoost, LightGBM, and CatBoost) and deep learning models (CNN, RNN, GAN, LSTM, and Transformer). In addition, a hybrid ensemble combining CatBoost, GAN, and Transformer is proposed to enhance predictive reliability. The empirical results show that ESG-augmented models consistently outperform financial-only baselines across AUC and F1 metrics. Among individual models, the ESG-enhanced Transformer achieves the strongest discriminatory power, while the proposed hybrid ensemble delivers the best overall predictive performance. The findings contribute to the literature by demonstrating the incremental value of ESG information in predicting corporate carbon emissions and by presenting a practical AI-based framework for compliance-oriented screening under carbon regulation. From a policy and investment perspective, the model provides a useful decision support tool for anticipating potential inclusion in emissions trading schemes, assessing transition exposure, and supporting data-driven decarbonization strategies. Full article

A major connectivity gap arises from the misalignment between the forward-looking climate disclosures required by IFRS S2 and the historically rooted asset valuations mandated by IAS 36. This misalignment can cause the overvaluation of carbon-intensive assets and disrupt capital allocation decisions. This research specifically examines transition risks, such as carbon pricing, regulatory shocks, and technological disruption, and quantifies the financial externality using a combination of deterministic impairment testing and stochastic climate scenarios. We create a constructive framework and develop a model of a Synthetic Representative Firm, calibrated to major integrated steel producers in Europe. To generate nonlinear Green Swan shocks for Value-in-Use, the process combines Monte Carlo simulation with the Merton Jump-Diffusion model. This comparison shows the difference between the steady Management View and the volatile Market View. Empirical results reveal a material Sustainability Discount, representing a substantial erosion in the recoverable amount under IFRS S2 transition risk scenarios compared to the IAS 36 Deterministic Baseline. Simulations show a strong probability of asset stranding due to restricted cost pass-through, indicating that older assets may face elevated impairment risks under disorderly transition scenarios. Traditional deterministic models may not fully capture aspects of Double Materiality, potentially leaving balance sheets less responsive to transition risks. Integrating digitalization and the Circular Carbon Economy (CCE) framework presents a strategic method for averting value destruction. Therefore, this research supports the integration of stochastic transition risk modeling into impairment testing to achieve faithful financial representation. Full article

The Taskforce on Nature-related Financial Disclosures (TNFD) refers to both the international organizing body and the disclosure framework it developed. Throughout this article, the term TNFD is used to encompass both the organization and the framework to ensure precision while maintaining conciseness. TNFD has emerged as a key mechanism for integrating nature-related risks and opportunities into corporate decision-making, extending the scope of existing environmental, social, and governance (ESG) and climate-related disclosures. As TNFD adoption remains at an early diffusion stage, empirical evidence on its global uptake and sectoral characteristics is still limited, particularly in nature-dependent industries such as forestry and environmental services. This study provides an exploratory mapping of global TNFD adoption patterns using the complete list of TNFD adopting organizations disclosed on the official TNFD platform as of June 2025. A total of 584 organizations across 54 countries were analyzed, with a focused examination of forestry- and environment-related entities. Rather than testing causal relationships, this research adopts a descriptive and structural analytical approach to identify geographic, institutional, and sectoral patterns of adoption. The results reveal a strong concentration of TNFD adoption in developed economies and corporate entities, while forestry-specific adopters remain limited in number. Notably, TNFD adoption does not appear to correlate with forest resource endowment, suggesting that governance capacity and financial disclosure readiness are more influential than ecological conditions. Based on these findings, the study discusses strategic implications for forestry and environmental organizations and proposes a conceptual framework for advancing nature-related financial disclosure in the sector. This research contributes an early-stage empirical foundation for understanding TNFD diffusion and offers practical insights for policymakers, corporations, and researchers seeking to operationalize nature-related disclosure frameworks. Full article

The objective of this scientific study is to examine whether the climate change attention of the chief executive officer promotes corporate social responsibility. To perform the extensive calculations required for this analysis, the study utilizes comprehensive panel data sourced from Carbon Disclosure Project, KLD, and financial databases. The scientific research methods used include two-stage instrumental variable estimation and difference-in-differences approaches to rigorously establish a causal relationship. The results identify a significant positive correlation between chief executive officer climate change attention and overall corporate social responsibility. Specifically, this executive focus significantly improves external and internal corporate social responsibility while reducing socially irresponsible performance; however, it does not enhance material corporate social responsibility. Furthermore, the findings indicate that this positive effect is significantly amplified when chief executive officers are in the early stages of their careers or receive high compensation, particularly equity-based compensation. Additionally, the implementation of a corporate low-carbon strategy serves as an important mediating channel for improving social performance. In conclusion, executive cognitive attention is a fundamental determinant of a firm’s strategic behaviors. It is recommended that corporate boards structure equity-based compensation to align with sustainability goals and actively support low-carbon strategies to maximize the positive impact of executive attention on sustainable development. Full article

The current research examines the impact of climate change disclosure (CCD) on firm value (FV) of Egyptian listed non-financial companies. The current research also investigates the moderating role of board gender diversity (BGD). The study sample incorporates Egyptian non-financial companies indexed in EGX 100 whose reports were available from 2018 to 2023. The final sample comprises 82 companies with 492 observations. Statistical analysis was conducted using a POLS and Fixed Effects Model, GMM, and the 2SLS method to address potential endogeneity and dynamic panel concerns. The results revealed a positive and significant impact of CCD on FV. Furthermore, BGD had a positive and significant moderating impact as BGD enhanced the relationship between CCD and FV. Moreover, the critical mass (CM) analysis of female representation revealed that the number of females on the board significantly moderates the CCD-FV relationship; as CM increases, the effect on the CCD-FV relationship becomes stronger. Although advanced panel techniques and instrumental variable approaches are used to mitigate identification concerns, the results should be interpreted in light of the observational nature of the data and the reliance on disclosure-based proxies. These findings are significant for governments, regulators, investors, and company leaders because the moderating role of BGD demonstrates how board governance affects firm value, particularly in emerging markets. This research adds to the academic discussion by emphasizing the beneficial effects of both BGD and CCD on FV, with a particular focus on developing economies. Full article

Whether firms translate climate risk perception into energy-related operational productivity remains unclear. Panel data on non-financial Chinese firms (2012–2023) are used to examine the association between climate risk perception (CRP) and energy productivity (EE). Firm-level CRP is constructed from management discussion and analysis (MD&A) sections using a term frequency–inverse document frequency (TF–IDF)-weighted, Word2Vec-expanded climate-risk lexicon. Energy productivity (EE) is measured as the natural logarithm of operating revenue per total energy consumption unit converted into tons of coal equivalent, capturing the economic value generated per energy input unit. Two-way fixed-effects models with firm-level clustered standard errors show a positive CRP–EE association. Digital transformation, proxied by an annual report text-based index across five digital technology domains, partially mediates this association, which is stronger when analyst coverage is higher and weaker when financing constraints are more severe. The results are robust to an alternative CRP proxy based on raw keyword frequency, dynamic specifications, and an instrumental-variable approach exploiting province-year extreme-weather exposure (share of days meeting extreme temperature or precipitation thresholds), using leave-one-province-out aggregation as the instrument and systematic heterogeneity across state ownership, pollution intensity, and high-tech status. This study extends CRP research from disclosure-oriented to energy-productivity outcomes, and highlights how digital capabilities, information scrutiny, and financial friction shape climate-aware energy productivity improvements. Full article

This study investigates whether green innovation (GI) enhances stock liquidity by mitigating information asymmetry. Using a hand-collected panel of 4752 unique U.S. publicly listed firms from 2010 to 2024, we employ OLS regressions to show that GI is associated with significantly higher stock liquidity. Our empirical evidence indicates that the relation between GI and market liquidity is highly contingent on firms’ market and accounting environments. Specifically, the liquidity-enhancing effect of GI is stronger for firms facing higher exposure to climate change risk and environmental regulatory uncertainty, where green signaling is most valuable. Furthermore, we find that a strong stakeholder orientation both stimulates green innovation and amplifies its positive impact on stock liquidity. Finally, the liquidity benefits of GI are more pronounced among firms adopting conservative financial reporting practices, suggesting that reporting conservatism mitigates the endogenous risks associated with GI and enhances the credibility of innovation-related disclosures. Overall, our findings establish a robust link between product market sustainability and financial market efficiency, highlighting the role of green innovation in reducing information frictions. Full article