Grantham researchers win award for paper on the impacts of climate litigation on firm value

A paper by researchers from the Grantham Research Institute at LSE has been awarded the Best Paper Prize at the 6th annual conference of the Global Research Alliance on Sustainable Finance and Investment (GRASFI).  This year’s event was hosted by the Yale Initiative on Sustainable Finance (YISF) at the Yale School of Management.

The winning paper was the Impacts of climate litigation on firm value by Misato Sato, Glen Gostlow, Catherine Higham, Joana Setzer and Frank Venmans.

The paper considers the impacts of climate litigation against corporations. The authors constructed a comprehensive database of filings and decisions relating to 108 climate change lawsuits against US and European-listed corporations between 2005 and 2021. They show that climate litigation filings or unfavourable court decisions reduced firm value by -0.41% on average. They identify conditions that would lead to a bigger effect, such as cases against the largest emitters, or ‘Carbon Majors’, and cases involving novel legal arguments. The results offer the first robust evidence on climate litigation risk as a financial risk.

A working paper version of the paper is available here.