Vulnerability of energy firms to climate risk: Does fintech development help?

Alam, Md Ashraful; Abbasi, Kaleemullah; W. Goodell, John; Min Du, Anna; Ahmed Brohi, Noor

Abstract

Energy firms, given their importance to overall economic activity, are increasingly seen as sources of systemic risk. Considering the relation of climate-change risk to energy sources, it is sensible to consider energy firms as vulnerable to climate-change. We investigate whether fintech development bolsters energy firms (valuations and dividends) as these firms face greater climate risk. Using an international sample of listed energy firms from 2016 to 2023 (2379 (1972) firm-year observations for our firm value (dividend) model) and ordinary least squares regression, we find that fintech development cushions the adverse impact of climate risk on energy firm values and dividends. Findings are robust to firm fixed effects and generalized method of moments models, additional control variables, and alternative measurements of value and dividends. Our results suggest that Fintechs may act as a channel for energy firms to withstand the negative repercussions of climate change, thereby supporting the efforts of regulators to promote Fintechs. Moreover, when confronted with high climate risk, our results suggest that managers could utilize Fintechs to increase firm value and dividends.

• Journal Article Type: Review
• Acceptance Date: Apr 13, 2025
• Online Publication Date: Apr 22, 2025
• Publication Date: Apr 30, 2025
• Deposit Date: May 31, 2025
• Publicly Available Date: Apr 23, 2027
• Print ISSN: 0140-9883
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 146
• Article Number: 108516
• DOI: https://doi.org/10.1016/j.eneco.2025.108516