Climate change and blue returns: Evidence from Niche firms in China

Environmental degradation and climate change require a coordinated effort to mitigate their impacts. Water and ocean-related companies are impacted by climate change, and their stock returns may be influenced by factors related to the circular economy. We study this phenomenon by selecting a comprehensive sample of blue firms listed on the two main stock exchanges in China. Our assessment shows that the blue returns are influenced negatively by the sea temperature anomaly and positively related to climate change performance. The results remained robust after controlling for conventional asset pricing factors. These findings have important implications for investors and policymakers.