How climate vulnerability affects IPO activity: evidence from OECD countries

Abstract

This study investigates the effect of climate risk vulnerability on IPO activity across 28 OECD countries between 1995 and 2020. Using the ND-GAIN Climate Vulnerability Index, we find that greater climate vulnerability is associated with a decline in IPO activity in terms of the number of offerings and total proceeds. These findings suggest that elevated climate risks heighten financial uncertainty, discouraging firms from going public and dampening investor interest. Importantly, we show that this negative effect is lower in countries with higher levels of climate readiness. Among the six sectoral components of the index, only infrastructure shows a negative and significant relationship with IPO activity. Our results are robust to a range of model specifications, lagged analyses, and instrumental variable approaches.