Extreme weather, IT investment, and corporate sustainability

The capacity of businesses to withstand the impacts of extreme weather has become a subject of concern in both theoretical and practical terms. This growing focus is driven by the occurrence of increasingly frequent extreme weather events, both natural and human-induced, which have had a significant impact on economic development and business operations. This study examines the impact of extreme weather on corporate IT investment using a sample of 20,224 observations of 3330 Chinese listed firms from 2013 to 2022. The findings indicate that there is a correlation between extreme weather and an increase in corporate IT investment. This is attributed to a reduction in the availability of labor due to the adverse effects of extreme weather. Concurrently, the rise in IT investment levels observed in companies as a consequence of extreme weather conditions has the effect of enhancing their resilience to climate risk and improving firm value, which is a crucial factor in the sustainable development of business. This study has theoretical and practical significance for a deeper understanding of the relationship between extreme weather and enterprise IT construction.