Communities and individuals are turning to courts to hold governments and high-emitting firms to account for the adverse consequences of climate change. Such litigation is part of a broader trend in which stakeholders are increasingly scrutinizing firms for their sustainability practices. For firms, rising climate litigation risk may exacerbate wider sustainability risks. Here we construct a comprehensive database of filings and decisions relating to 108 climate lawsuits against US- and European-listed firms between 2005 and 2021. We show that firms experience, on average, a 0.41% fall in stock returns following a climate-related filing or an unfavourable court decision. Cases filed against Carbon Majors, primarily the world’s largest fossil fuel producers, saw the largest stock market responses, with returns reducing by 0.57% and 1.50% following filings and unfavourable decisions, respectively. Markets respond more to ‘novel’ climate litigation involving new legal arguments or jurisdictions. Our findings suggest that climate litigation provides a way for stakeholders to challenge actual and perceived weaknesses in the sustainability practices of firms. We conclude that financial markets consider such litigation to be a relevant financial risk.<\/p>\n\n\n\n
Sato, M., Gostlow, G., Higham, C. et al.<\/em> Impacts of climate litigation on firm value. Nat Sustain<\/em> 7, 1461–1468 (2024). https:\/\/doi.org\/10.1038\/s41893-024-01455-y<\/strong><\/p>\n\n","protected":false},"excerpt":{"rendered":"\n The authors of this paper construct a comprehensive database of filings and decisions relating to 108 climate lawsuits against US- and European-listed firms between 2005 and 2021.<\/p>\n\n","protected":false},"author":12,"featured_media":0,"template":"","tags":[1738,1667,1147,2252,4412],"publication-type":[436],"topic_area":[],"class_list":["post-76343","publication","type-publication","status-publish","hentry","tag-business","tag-carbon-majors","tag-climate-litigation","tag-financial-risk","tag-stock-prices","publication-type-research-articles"],"acf":{"exclude_from_sync":{"ref_value":"field_560538b0e7350","value":"0","type":false,"post_type":""},"show_translations_widget":{"ref_value":"field_6203d588c41e8","value":"0","type":false,"post_type":""},"downloads":{"ref_value":"field_52f16cc1a80f2","value":false,"type":"repeater","post_type":""},"rss_newsletter":{"ref_value":"field_54f5c2c1544d8","value":"","type":false,"post_type":""},"profile_link":{"ref_value":"field_52f164b5189e9","value":["misato-sato","glen-gostlow","catherine-higham","joana-setzer","frank-venmans"],"type":"relationship","post_type":"profile"},"article_link":{"ref_value":"field_52eee3c7f0586","value":"https:\/\/www.nature.com\/articles\/s41893-024-01455-y","type":false,"post_type":""},"article_link_title":{"ref_value":"field_5322399d89d42","value":"External link to article","type":false,"post_type":""},"spotlight":{"ref_value":"field_52f80896506d3","value":"","type":false,"post_type":""}},"yoast_head":"\n