Climate risk, supply chain stability, and firm value

Based on data from Chinese A-share listed firms between 2014 and 2024, this study constructs a firm-level climate risk exposure index using textual analysis and machine learning methods to examine the impact of climate risk on firm value. The results indicate that climate risk exerts a significantly negative effect on firm value, and this finding remains robust after applying instrumental variable approaches and a series of robustness tests. Mechanism analysis reveals that climate risk reduces firm value by weakening supply chain stability, particularly by significantly affecting supplier stability, whereas its impact on customer stability is not statistically significant. This finding precisely characterizes the upstream transmission mechanism of climate risk along the supply chain. Furthermore, this study finds that firms can effectively offset the adverse impact of climate risk on firm value by actively promoting green technological innovation, suggesting that green innovation constitutes a core capability for building corporate climate resilience. Heterogeneity analysis shows that the negative effect of climate risk on firm value is significantly amplified in firms facing stronger financing constraints, highlighting the critical buffering role of financial resources in responding to climate shocks. Overall, this study deepens the understanding of the economic consequences of climate risk from the perspective of supply chain stability and provides practical implications for firms seeking to enhance climate resilience and achieve sustainable development under uncertainty.