Green Credit Policy and Corporate Exposure to Climate Risk in the Case of BRICS Countries

Abstract

This paper examines the impact of green credit policy on corporate exposure to climate risk in BRICS countries
in 2000–2024. The objective of this study is to assess the extent to which access to sustainable financing can mitigate both physical and transition climate risks for companies operating in emerging economies. The methodology is based on a panel of listed companies in the BRICS countries, combining financial, climate, and regulatory data from national and international databases. We use the System GMM econometric approach, which corrects for potential endogeneity and biases related to unobserved heterogeneity. The empirical results indicate that access to green credit significantly reduces corporate exposure to climate risk, particularly in carbon-intensive sectors and in countries with strong regulatory frameworks. The effect is more pronounced for large companies and varies depending on the type of risk: transition risk is more effectively mitigated than physical risk. The study’s novelty lies in its extensive time coverage from 2000 to 2024, the integration of multidimensional data, and the rigorous application of advanced econometric techniques. This
paper contributes to the literature on green finance in emerging countries and offers concrete implications for public decision-makers and financial institutions in terms of climate strategy.