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Linking Climate Transition Risk into Credit Risk—A Firm-level Analysis for India

Arindam Bandyopadhyay & Partha Ray

Indian Economic Journal2026https://doi.org/10.1177/00194662251410144article
ABDC B
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0.50

Abstract

This article explores the connection between carbon emissions (CO 2 EM), climate risk ratings and firm performance in India. We analyse the environmental, social and governance (ESG) ratings and financial information provided by the Refinitiv EIKON database and information given in the Carbon Disclosure Project (CDP) of the leading 69 corporations listed on the Bombay Stock Exchange (BSE) top 200 list, from 2017 to 2022. We have also examined CRISIL’s ESG ratings for 517 listed companies for 2022. We find that a firm’s heightened ESG risks increase its chance of being rated lower by the credit rating agency CRISIL. Moreover, CO 2 EM also have a significant adverse effect on the firm’s credit rating. We find empirical support that better ESG scores significantly improve a firm’s market performance as well as profitability performance. Also, a lower ESG rating and CDP disclosure quality have a significant negative impact on firm profitability. Thus, higher CO 2 EM by companies diminish their export earnings. Our panel, as well as cross-sectional analysis, reveals that there is a significant association between CO 2 EM, ESG ratings, and a firm’s creditworthiness. JEL Codes: G14, G20, G35

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https://doi.org/https://doi.org/10.1177/00194662251410144

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@article{arindam2026,
  title        = {{Linking Climate Transition Risk into Credit Risk—A Firm-level Analysis for India}},
  author       = {Arindam Bandyopadhyay & Partha Ray},
  journal      = {Indian Economic Journal},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1177/00194662251410144},
}

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Linking Climate Transition Risk into Credit Risk—A Firm-level Analysis for India

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F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
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R · text relevance †0.50 × 0.4 = 0.20

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