Climate Litigation Decreases Firm Value

New research published by the London School of Economics’ Grantham Research Institute on Climate Change and the Environment (LSE GRI) has highlighted a causal link between climate litigation and stock prices. Analysing 108 climate change lawsuits against US and European-listed corporations between 2005-21, the paper noted that climate litigation filings or unfavourable court decisions reduced firm value by –0.41% on average. The largest stock market responses were observed for cases filed against high-emitting companies across the energy, utilities and materials sectors, with a -0.57% average firm value reduction following case filings and a -1.50% value reduction average following unfavourable judgements. “The findings suggest that lenders, financial regulators and governments should consider climate litigation risk as a relevant financial risk in a warmer future,” the paper said.  

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

Copyright © 2023 ESG Investor Ltd. Company No. 12893343. ESG Investor Ltd, Fox Court, 14 Grays Inn Road, London, WC1X 8HN

To Top