The Impact of Climate Risks on Corporate Debt Financing

Abstract

As global resource demands and climate pressures grow, companies face the dual challenge of sustainability and environmental responsibility. Using panel data from U.S. publicly listed firms (2014–2022) and a text-based proxy for climate risks, this study explores the impact of just transition climate risks on corporate debt financing. Results show climate risks increase debt financing, driven by optimized leverage and operational strategies, but also constrain financing through efficiency and liquidity pressures. Smaller firms benefit most, though supply chain stress can reduce economic value. This study provides actionable insights for strengthening resilience and competitiveness in a low-carbon economy.