The Impact of Extreme Temperature on Enterprise ESG: An Empirical Analysis of China

Abstract

Global climate warming leads to frequent extreme temperature events. Extreme temperatures bring uncontrollable uncertainty factors to the operation and management of enterprises. The Environmental, Social and Governance (ESG) performance of enterprises is closely related to their business management. However, empirical evidence on to what extent extreme temperatures affect the ESG performance of enterprises is still lacking. The paper analyses the influence of extreme temperatures on the ESG performance of enterprises to bridge this gap by constructing temperature intervals. There are several important results—(1) For each additional day within the temperature range of 30°C and above, the ESG score decreased by 0.09 points; (2) Extreme temperatures adversely affect ESG through operating costs, shareholders' equity and information disclosure levels of enterprises; (3) Extreme temperatures are more likely to negatively impact the ESG performance of enterprises in the realty, manufacturing, electricity and transportation industries. Therefore, at the macro level, the government should formulate relevant policies to address global warming. At the micro level, enterprises should gradually incorporate climate change risks into their daily management systems to reduce the negative impact of extreme temperatures on their ESG performance.

Received: 08 October 2024 | Revised: 23 December 2024 | Accepted: 26 December 2024

Conflicts of Interest

The authors declare that they have no conflicts of interest to this work.

Data Availability Statement

Data available on request from the corresponding author upon reasonable request.

Author Contribution Statement

Yanni Yu: Conceptualization, Methodology, Validation, Formal analysis, Resources, Data curation, Writing - original draft, Writing - review & editing, Visualization, Supervision, Project administration, Funding acquisition. Xin Meng: Methodology, Software, Formal analysis, Investigation, Data curation, Writing - original draft, Writing - review & editing, Visualization. Chengqing Ren: Data curation, Visualization.