Does Climate Change Affect Firm Sales? Identifying Supply Effects
Journal
Journal of Financial and Quantitative Analysis
Type
journal article
Date Issued
2026-09-03
Author(s)
Abstract
We estimate the supply side effect of climate change on firm sales by exploiting variation in local temperature across suppliers of the same client. We find that suppliers experiencing a 1°C increase in average daily temperature decrease their sales by 2%. In addition, extreme hot and cold weather events lead to larger drops in sales. The effect is more pronounced among suppliers in manufacturing and heat-sensitive industries, which is consistent with lower labor productivity and labor supply when temperatures are higher. Financially constrained suppliers are more affected due to their lack of financial flexibility to adapt to changes in temperatures.
Keywords
Climate change
Climate finance
Economic costs
Firm sales
Production networks
Productivity
Financial constraints
HSG Classification
contribution to scientific community
Refereed
Yes
Volume
forthcoming
Division(s)
File(s)![Thumbnail Image]()
Name
ssrn-3724940 (1).pdf
Size
1.39 MB
Format
Adobe PDF
Checksum (MD5)
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