The impact of climate policy uncertainty on corporate investment
Abstract
This study investigates the impact of climate policy uncertainty (CPU) on corporate investment. Drawing on real options theory, the findings reveal a negative relationship between CPU and both corporate investment rate and investment efficiency. The effects are particularly pronounced for firms with greater exposure to climate change, higher levels of investment irreversibility, and more severe financial constraints. Additionally, CPU is associated with declines in operating performance and stock returns, consistent with the observed reductions in investment efficiency. These results underscore the disruptive impact of climate policy uncertainty on firms’ operational performance and investment decision-making processes.
Fields of Study & Subjects
Market Dynamics and Volatility
Sustainable Finance and Green Bonds
Capital Investment and Risk Analysis
Publication details
- Journal / source
- International Review of Financial Analysis
- Publisher
- Elsevier BV
- Volume
- 113
- Pages
- 105118–105118
- Publication date
- 23 February 2026
- Language
- EN