HEC-Ecole de gestion de l'Université de Liège
HEC-Ecole de gestion de l'Université de Liège

Environmental policies and firms'financial performance and risks : Is the environmental score of European firms a tool for financial risk mitigation and financial performance improvement after the heatwaves of August 2022?

Orlandi, Lucas ULiège
Promotor(s) : Moinas, Sophie
Date of defense : 21-Jun-2023/28-Jun-2023 • Permalink :
Title : Environmental policies and firms'financial performance and risks : Is the environmental score of European firms a tool for financial risk mitigation and financial performance improvement after the heatwaves of August 2022?
Author : Orlandi, Lucas ULiège
Date of defense  : 21-Jun-2023/28-Jun-2023
Advisor(s) : Moinas, Sophie 
Committee's member(s) : Scivoletto, Alexandre ULiège
Language : English
Number of pages : 64
Keywords : [en] Climate change
[en] Financial performance
[en] Risk management
[en] Event study
[en] Envionmental policies
Discipline(s) : Business & economic sciences > Finance
Target public : Researchers
Professionals of domain
General public
Institution(s) : Université de Liège, Liège, Belgique
Degree: Master en sciences de gestion, à finalité spécialisée en Banking and Asset Management
Faculty: Master thesis of the HEC-Ecole de gestion de l'Université de Liège


[fr] Worldwide global warming catastrophes have devastating impacts on regions, with increased
frequency and intensity. Consequently, businesses, including financial markets, are affected by these
disasters. Existing literature has examined the role of Environmental, Social, and Governance (ESG)
policies in enhancing firms' stability. This study focuses on the impact of environmental policies on
financial indicators of firms during the post-disaster period, specifically analysing the heat waves of
August 2022.
The objective is to explore the potential benefits of robust environmental policies in improving
financial performance and reducing risks for companies facing significant increases in abnormal
temperatures. To assess this, a net environmental index was developed to capture the performance
of environmental policies, classifying firms into two samples: low and high-index enterprises. The
study encompasses a broad sample of European public companies, incorporating financial risks,
performance metrics, economic sectors, and environmental scores.
A difference-in-differences model was employed to regress financial data on the index, mitigating
potential issues of reverse causality commonly associated with empirical ESG studies. The main
findings suggest that firms with a high index experience lower systematic risk and higher year-to-date
returns in the post-heatwaves period. However, other regressed variables did not exhibit significant
associations with the environmental policy suggesting having a strong index after the heat waves is
not improving firms’ performance and risk mitigation.
These findings partially support the hypothesis that firms with a high index demonstrate greater
resilience during disruptive temperature events. However, due to the limitations of relying on data
from a single database and the study's restricted time interval, the conclusions drawn are not
comprehensive enough. Future research should expand the time frame to account for the increasing
global warming trend, include a broader range of databases covering overall market ESG ratings, and
incorporate more detailed metrics underlying the three attributes of the index. These avenues of
investigation hold promise for providing more significant evidence regarding the importance of
environmental regulations for financial corporations' well-being.



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  • Orlandi, Lucas ULiège Université de Liège > Master sc. gest., à fin.


Committee's member(s)

  • Scivoletto, Alexandre ULiège Université de Liège - ULiège > HEC Liège : UER > UER Finance et Droit : Analyse financière et finance d'entr.
    ORBi View his publications on ORBi
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