Big polluters’ share prices fall after climate lawsuits, study finds

Exclusive: Fossil fuel companies register drop in value after litigation or unfavourable judgments

Date: Friday, May 22, 2023
Complete Article: The Guardian


Climate litigation poses a financial risk to fossil fuel companies because it lowers the share price of big polluters, research has found.

The researchers hope their work will encourage lenders, financial regulators and governments to consider the effect of climate litigation when making investment decisions in a warmer future, and ultimately drive greener corporate behaviour.

“We didn’t know before if the markets cared about climate litigation.It’s the first evidence supporting what was suspected before; that polluting firms and especially carbon majors now face litigation risk, in addition to transition and physical risk.”

There has been a surge in climate litigation against fossil fuel firms and other polluting industries in recent years, with many cases challenging corporate inaction on the climate crisis and attempts to spread misinformation, and companies are increasingly recognising it as a risk.

Sato said it was too early to say if litigation was driving substantial changes in climate action among big polluters, but evidence that lawsuits affected share price or credit ratings could help influence corporate behaviour.

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