Climate Risk and Firm Value Preservation from the Perspective of Supply Chain Strategic Choice

As climate-related disasters increase globally, research on practical corporate measures to address climate change risks is essential for ensuring business security and long-term economic sustainability. This study investigates the impact of climate risk on firm value with a focus on the moderating role of supply chain strategic choice. Our findings show that firms in cities with greater climate risks are associated with lower firm value. We study influence mechanisms and find that increased operational disruption risk, reputational damage, and strengthened local environmental regulations are significant influence mechanisms. From the perspective of supply chain strategic choice, enhancing geographic diversification and local supplier diversification, increasing supply security reserves, and advancing supply chain digitalization can significantly mitigate the negative impact of climate risk on firm value, possibly suggesting that firms can respond to climate risks by adapting their supply chain strategies. Heterogeneity analysis shows that climate risk has greater effects in regions characterized by weak institutional capacity for climate risk response and high public awareness of climate shocks, as well as among non-state-owned firms. Additional analysis indicates that climate risk accelerates corporate efforts to improve ESG performance, thereby reinforcing their green and sustainable development. Overall, our findings provide an alternative perspective on the risk-management benefits of supply chain strategies, suggesting that supply chain strategies can be regarded as a response to climate change-related risks for corporations.