“Celebrating the 45th Anniversary of the University of Macau”
Accounting for Carbon Earnings Risks
Prof. Hao LIANG, Professor of Finance, Lee Kong Chian School of Business, Singapore Management University
Date: 22 April 2026 (Wednesday)
Time: 14:00-15:30
Venue: E22-G010
Host: Prof. Rubin HAO, Assistant Professor in Accounting
Abstract
We study how climate-related transition risk maps into firms’ earnings exposure and financial reporting incentives using a novel global dataset that estimates firms’ Carbon Earnings at Risk (CEaR)—the monetized value of unpriced future carbon costs implied by scenario-based carbon prices and firms’ Scope 1–2 emissions. CEaR is forward-looking and expressed in monetary units, allowing a direct comparison to contemporaneous earnings and a natural bridge to accounting materiality. Across scenarios and horizons, CEaR accounts for a meaningful fraction of EBITDA on average and exhibits substantial firm-level heterogeneity unexplained by country and industry characteristics. We validate CEaR against external measures of regulatory climate risk and emissions. Using the staggered adoption of national emissions trading systems and carbon taxes to sharpen identification, we find that firms with higher CEaR subsequently increase their exposure to climate-mitigation revenue opportunities, consistent with strategic repositioning in response to transition risk. Our findings highlight that transition risk can represent a material, quantifiable earnings exposure that is not fully reflected in current financial statements, underscoring the importance of incorporating monetized transition-risk information into corporate reporting and related assurance.
Speaker
Dr. Hao Liang is Ho Bee Professor in Sustainability Management and Professor of Finance at Singapore Management University (SMU), where he also serves as the Academic Director of the Singapore Green Finance Centre (Singapore’s first centre of excellence for sustainable finance) and the Co-Lead of the Sustainable Business Research Peak. Previously he held the BNP Paribas Fellowship, DBS Sustainability Fellowship, and Lee Kong Chian Fellowship.
Dr. Liang’s research interests include sustainable finance, impact investing, corporate finance, and governance. He has published in prestigious academic journals, such as the Journal of Finance, Journal of Financial Economics, Review of Finance, Journal of International Business Studies, Management Science, Organization Science, Journal of Business Venturing, and Proceedings of National Academy of Sciences. He is the Section Editor (Finance & Business Ethics) for the Journal of Business Ethics, an Associate Editor for Management Science, Journal of Business Research, Asia-Pacific Journal of Financial Studies, and British Accounting Review, and serves on the editorial review board of the Strategic Management Journal.
All are welcome!
