Climate Risk Disclosure, Environmental Regulation and Debt Financing Costs

Xiaoyan Chen

doi:10.6981/FEM.202501_6(1).0019

Authors

Xiaoyan Chen

DOI:

https://doi.org/10.6981/FEM.202501_6(1).0019

Keywords:

Climate Risk Disclosure; Environmental Regulation; Debt Financing Cost.

Abstract

The situation of global warming is severe. After the "double carbon" goal was proposed, climate risks have attracted more and more attention from investors and creditors. In my country's underdeveloped capital market, debt financing is the main channel for corporate financing in my country. Therefore, whether disclosing climate risks can reduce corporate debt financing costs is a topic that needs urgent research. Based on the information asymmetry theory, this article analyzes the possible impact and mechanism of corporate climate risk information disclosure on debt financing costs, selects data from A-share listed companies from 2007 to 2021, and empirically tests the impact of corporate climate risk disclosure on debt financing costs. The study found that climate risk disclosure can reduce corporate debt financing costs, especially among state-owned enterprises, and that disclosure of chronic risks and transition risks has a significant effect on reducing debt financing costs. The mechanism behind this is that disclosing climate risks can increase the intensity of environmental regulation, thereby improving environmental performance and reducing debt financing costs. To this end, it is recommended to further encourage companies to actively disclose climate risks, accelerate the establishment of a climate risk disclosure system, improve the quality of corporate climate risk information disclosure, reduce corporate debt financing costs, and help companies develop high-quality development.

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