Climate change and firm value: The impact of severe weather warnings

Project overview

This project investigates the effect of climate change on financial stability and economic growth by examining how severe weather warning alerts in the UK affect firms’ market value. As governments, investors and businesses increasingly respond to climate challenges, understanding the financial implications of such events has become crucial. Climate events such as storms, hurricanes, floods and heatwaves can disrupt operations, damage assets and raise costs, posing significant risks to firms’ profitability and market confidence. Using data from the Met Office and Refinitiv, this study will provide empirical evidence on how investors respond to salient weather alerts and how these responses influence market performance. The findings will enrich the growing literature on climate finance and shed light on the economic consequences of environmental shocks.

Project objectives

The main objective of this project is to assess the impact of severe weather warnings on the financial performance of UK-listed firms. The study aims to determine whether the dissemination of severe weather alerts influences investor behaviour and firm performance, thereby affecting broader market stability and economic growth. Employing quantitative methods such as event study analysis and regression models, the project will produce robust, data-driven insights that advance academic understanding and inform effective policy responses to climate-related financial risks.

Impact statement

The results of this research will have significant implications for policymakers, regulators, investors and society. By providing empirical evidence on how severe weather warnings affect firm performance, the study will support the development of policies that enhance market resilience and promote sustainable economic practices. The findings will also contribute to the broader societal goal of mitigating climate risks by informing strategies that protect the economy and foster long-term sustainability. Ultimately, this research will aid in building a more climate-resilient financial system that supports economic growth and the well-being of future generations.

Outputs

1. Journal article: This study will result in a journal article to be submitted in a leading international journal, to extend the literature on climate change and reach out to a wide audience and contribute to policy makers in understanding the impact of climate change through severe weather events on financial markets.

2. Non-specialist article: This project will also result in a short non-specialist article with the main findings of the study. This article will be distributed to media to share the findings in a way that is accessible by non-specialists.

3. Conference presentation: The findings of this study will be disseminated in two international conferences to promote the findings of the paper and achieve a wider impact.

4. Research Enriched Learning (REL): The findings of this project will be integrated into workshops, lectures and seminar activities.