Climate-risk materiality and firm risk

Abstract Managers are required to disclose material climate risk in Form 10-K, but their decision whether or not is confounded by the lack of consensus on firms, as well uncertainty about enforcement disclosure regulations. Using SASB Materiality Map™ proxy for market expectations materiality, we test association between disclosing 10-Ks and firm (proxied cost equity (COE)) varies with materiality. S&P 500 firms’ decisions 10-K 2008 2016, find that COE 27 bps lower than nondisclosing COE. In industries where expects be material, 50 firms’, while does expect 23 firms’. Our results indicate markets use materiality infer credibility managers’ decisions. research contributes policy-making disclosures regulatory filings informs debate around costs benefits SEC’s current proposal enhance disclosures.