Financial climate-risk measurement, impact funds, and green transitions
Laux,Volker Mahieux,Lucas
Laux,Volker
Mahieux,Lucas
Abstract
Regulators are contemplating or mandating precise measurement of financial climate-risk exposure to promote sustainable investments. We show that such mandates can be counterproductive in the presence of social funds that catalyze change by subsidizing the adoption of cleaner production technologies. Firms can exploit a social fund's impact motive by measuring their climate-risk exposure imprecisely. This strategic imprecision prevents the fund from distinguishing between firms that require subsidies and those that would switch to clean technologies for financial reasons alone, thereby increasing the ex ante subsidies firms can extract. A by-product of this rent-seeking behavior is that firms adopt clean technologies more frequently than would be jointly efficient under precise measurement. Our analysis suggests that the regulatory push for precise climate-risk measurement can reduce social funds' impact and the frequency of green transitions.
Description
Date
2026-02
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
Organizational Units
Journal Issue
Keywords
Financial climate-risk measurement, Impact investing, Information design, Socially responsible investing, SDG 13 - Climate Action
Citation
Laux, V & Mahieux, L 2026, 'Financial climate-risk measurement, impact funds, and green transitions', Journal of Accounting Research. https://doi.org/10.1111/1475-679x.70042
License
info:eu-repo/semantics/openAccess