Extreme Climate Shocks and Corporate ESG Behavior: Motivations, Boundary Conditions, and Economic Consequences

We examine the impact of extreme climate on the ESG behavior of Chinese A-share listed firms. According to the regression results, extreme climate enhances corporate ESG engagement, with a more pronounced effect among firms facing lower financing constraints and those located in regions with more efficient factor-market circulation. Mechanism tests indicate that this effect arises from both firms’ proactive adoption of differentiation strategies and their passive responses to stricter environmental regulation. Moreover, under extreme climate conditions, corporate ESG engagement enhances firms’ stock returns and strengthens their market competitiveness.