Firm-level climate change exposure and credit ratings

We investigate how within-firm changes in climate-related risk disclosure affect credit rating quality among U.S. companies. Using 44,905 quarterly observations from 1,546 firms spanning 2001 to 2023, we find that increases in a firm’s climate change exposure, measured by the relative frequency of climate discussion in earnings calls compared to the firm’s historical average, are positively associated with its credit ratings. This suggests that credit rating agencies reward greater transparency and proactive engagement with climate risks. Our results are robust across multiple identification strategies and highlight the growing importance of climate-related disclosure practices in corporate creditworthiness.