Institutional ownership, corporate governance and climate change risk management: evidence from the Middle East and North Africa

Purpose This study aims to examine the relationship between institutional ownership, board-level corporate governance mechanisms, and climate change risk management practices. Design/methodology/approach Using panel data from financial institutions listed in the Middle East and North Africa (2013–2022), a multidimensional index of climate change risk management was developed. Several panel data regression techniques, including generalized least squares, generalized methods of moments, and two-stage least squares, were employed to analyze the relationship between institutional ownership, corporate governance, and climate change risk management. Findings Institutional ownership is negatively associated with climate change risk management, reflecting a focus on short-term financial goals over climate resilience. Board independence, meeting frequency, and attendance show a positive relationship with climate change risk management. Unexpectedly, larger audit committees and the existence of corporate social responsibility/sustainability committees have a negative impact on climate change risk management, potentially due to the prioritization of financial performance over climate risks. These results highlight the conditional effectiveness of corporate governance mechanisms in specific contexts. Research limitations/implications This study focuses on financial institutions listed in the Middle East and North Africa. Future research should explore other sectors, investor types and corporate governance mechanisms that might affect climate change risk management to gain a clearer understanding of these practices in emerging markets. Social implications The findings provide valuable insights for financial institutions to enhance their corporate governance frameworks and effectively manage climate change risks. They can also assist policymakers in strengthening sustainable finance and economic resilience across the Middle East and North Africa region. Originality/value This study introduces a climate change risk management index and examines its relationship with corporate governance mechanisms within financial institutions listed in the Middle East and North Africa region. It addresses both regional and conceptual gaps in climate finance, offering practical and theoretical insights into climate risk governance in underexplored contexts.